Turkey: External Imbalances Amplify the Crisis, Domestic Strengths Limit the Damage
8. 9. 10.
11.
12.
and negatively contributed to growth (by 0.8 percentage points). It seems that the risk of crowding out is not very high in 2010. The government’s growth projections for 2010–12 are expected to be revised upward in the new Medium-Term Program. Estimations are based on Malatyalı (2010). Taking 2009 as a base, the cumulative potential growth during 2010–12 is nearly 9 percent, and 23 percent during 2010–15. If the output gap of the base year, about 6 percent, is added (i.e., actual growth rates may be higher than potential rates to close the gap), cumulative actual growth will reach 15 and 30 percent for the respective periods, yielding about 5 percent average annual growth. Thus, we can project an “optimistic” average growth rate of perhaps 4.8 percent during 2010–15. It is also possible to use the maximum capacity utilization rate and maximum working hours instead of average values of these variables. In this case, potential output corresponds to the level of output that can be produced when the capital stock and labor are fully employed. This definition yields different values for the level of potential output, but similar potential growth rates. Regarding the contribution of human capital to productivity growth, equations 11.4 and 11.5 give similar results.
References Alp, H., and S. Elekdağ. 2010. “The Role of Monetary Policy during the Global Financial Crisis: The Turkish Experience.” Unpublished manuscript. Altuğ, S. G., A. Filiztekin, and Ş. Pamuk. 2007. “The Sources of Long-Term Economic Growth for Turkey 1880–2005.” Koc University and CEPR Discussion Paper 6463, Center for Economic and Policy Research, Washington, DC. Caselli, F., G. Esquivel, and F. Lefort. 1996. “Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics.” Journal of Economic Growth 1 (3): 363–89. Ertuğrul, A., and F. Selçuk. (2001). “A Brief Account of the Turkish Economy.” Russian and European Finance and Trade 37 (3): 6–28. IMF (International Monetary Fund). 2009. “State of Public Finances Cross-Country Fiscal Monitor.” IMF Staff Position Note, IMF, Washington, DC. Islam, N. 1995. “Growth Empirics: A Panel Data Approach.” Quarterly Journal of Economics 110 (4): 1127–70. Kaplan, C., E. Özmen, and C. Yalçın. 2006. “The Determinants and Implications of Financial Asset Holdings of Non-financial Firms in Turkey: An Empirical Investigation.” Working Paper 06/06, Central Bank of the Republic of Turkey, Ankara. Malatyalı, K. 2010. “Medium Term Growth Prospects for Turkey.” Background paper prepared for this project.
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