An evaluation of effects of the liberalization policies implemented often on foreign exchange rate

It is well known that liberalization refers to a restriction of government interventions, usually in areas of social or economic policy. Additionally, it is used to refer to economic liberalization, especially trade liberalization or capital market liberalization. In this study, the effects of the financial liberalization on exchange rate, is explained and an evaluation of the liberalization is given by considering the effects type of liberalization. In the first part of this study, it is tried to explain the theoretical subjects associated with liberalization and foreign exchange rate. Therefore, liberalization, types of liberalization, historical development of liberalization, methods of measuring liberalization are explained. The second part is dedicated to the liberalization periods of Turkish economy and arrangements devoted to liberalization on this period. Additionally, they are 1923- 1929 periods, 1950-1960 periods and liberalization policies implemented after 1980, evaluated the relation between liberalization and foreign exchange rate in Turkey, respectively. In the last part of the study, it is related to examination of between liberalization policies and foreign exchanges by means of empirical methods like co-integration tests. Thus, the possible effects of liberalization policy implementations over real exchange rates will also be studied by using advanced time series techniques such as Zivot and Andrews unit root test and Bounds Test. Shortly, a general evaluation of the study is given in the last part of the study.