Macroeconomic Effects of Interest Rate Liberalization: The Case of Turkey

ULUSSEVER , Talat (2009) Macroeconomic Effects of Interest Rate Liberalization: The Case of Turkey. In: 1st International Symposium on Sustainable Development, June 9-10, 2009, Sarajevo, Bosnia and Herzegovina.

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Abstract

This study proposes a financial computable general equilibrium (CGE) model, which represents the salient features of the Turkish economy. By including 15 production sectors and linking the real and financial sub-models through various channels of fund flows, interest rates, commercial bank intermediation, monetary and fiscal policies, we perform a counterfactual simulation using the financial CGE model to explore the potential macroeconomic effects of interest rate liberalization in the Turkish economy. Our results show that interest rate liberalization makes the government and the enterprises suffer a revenue loss, but households slightly and commercial banks notably revenue raise in both the short and long run. In addition, while the real GNP declines in the short run, it increases in the long run after the wage level has been adjusted fully and the employment effect has been eliminated.

Item Type: Conference or Workshop Item (Paper)
Uncontrolled Keywords: Interest Rate Liberalization, the Turkish Economy, Financial Computable General Equilibrium
Subjects: H Social Sciences > HB Economic Theory
Depositing User: Mr. Fatih Ozturk
Date Deposited: 29 Dec 2011 14:50
Last Modified: 30 Mar 2012 08:09
URI: http://eprints.ibu.edu.ba/id/eprint/1

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