The role of exports in the third generation crisis models: Nakatani (2017) Model

Financial crisis models see the external fragility factors as the most important cause of crisis in a country's economy. Financial crisis models explain the crisis with three different crisis models: first, second and third generation. According to the first and second generation crisis models, the cause of the crisis is the budget deficit. According to the third generation crisis models, foreign currency debt of the private sector causes the crisis. Nakatani (2017) added the export variable to the third generation crisis models and showed that exports can eliminate the possible imbalance. The aim of this study is to examine the role of exports based on Nakatani third generation crisis models. The data set used in the study covers the quarterly 2003-2019 period. According to the findings of the study, in the Nakatani (2017) model, exports have a significant effect on the exchange rate for Turkish economy. In addition, the effects of risk premium shocks, interest rates, TL overvaluation, deviations in national income and national reserves in the model on exchange rate were found to be statistically significant and consistent with theoretical expectations.