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This paper studies the performance of the Turkish economy under the reign of the Justice and Development Party (Adalet ve Kalkınma Partisi, AKP). Most of this period coincides with abundant global capital especially in the aftermath of the Great Recession. We argue that AKP’s economy policies were shaped with the goal of attracting foreign capital to the country, creating a debt ridden speculative growth model and turning a blind eye to the mandate of solving the country’s fundamental problems. Within this model, monetary policy has been the leading actor. Although the Central Bank has been operating with a price stability mandate during this period, inflation targeting performance has been poor, creating doubts about the leading motive behind the reaction function. Fiscal policy became a dependent variable, shadowed by the capital chasing monetary policy. As global liquidity started to become more risk averse in the post-tapering era and as accumulated domestic problems of the country became thicker, Turkey’s growth model proved to be unsustainable, intensifying external fragility for the period ahead.

Evidence suggests that the Canadian economy is over-shadowed with lagging productivity growth and that its innovation strategy lacks a market-oriented focus; and is unbalanced and biased. We study this problem with the aid of a dynamic general equilibrium model driven by analytics of endogenous growth and investigate the viable policy options and assess the interactions between knowledge driven growth, acquisition of human capital, and the role of strategic public policy for the Canadian economy. We study alternative public policies aimed at fostering the development of human capital (investment in education) and those at enhancing investments in innovation. Based on the re-allocation effects triggered by public subsidization policies on higher education versus industry/business R&D, our results corroborate that Canadian economy is falling short of its potential in (business) technological innovation. Our analyses further imply that the most welfare enhancing policy is to have a complementary mix of education and R&D subsidization designed to avoid the trade-offs that emerge in the short run. © 2015 Elsevier B.V.

Acar, Sevil/0000-0001-5535-8673; Acar, Sevil/0000-0001-5535-8673; Yeldan, A. Erinc/0000-0002-3123-4374 WOS:000447115000010 Turkey is known to suffer from severe volatility in its growth patterns, as well as from the uneven sectoral growth and employment. Volatile rates of emissions across sectors are further manifestations of this uneven structure. The purpose of this study is two-fold: first, we check for dynamic patterns of convergence of carbon dioxide (CO2) emissions across sectors; and second, using evidence from panel data econometrics, we search for the determinants of these processes utilizing macroeconomic explanatory variables. We find that, based on various alternate criteria, CO2 emissions display conditional convergence mainly driven by the business cycle. Furthermore, across sectors, high technology activities display convergence over time; and yet, medium technology sectors that constitute the bulk of the aggregate value added display either poorly convergent or divergent trends. These results reveal that much of the emissions convergence is driven by the business cycle rather than the workings of discretionary mitigation policy. (C) 2018 Elsevier B.V. All rights reserved. TUBITAKTurkiye Bilimsel ve Teknolojik Arastirma Kurumu (TUBITAK) [114K941] The authors gratefully acknowledge the research support provided by TUBITAK, under grant no 114K941. A previous version of the paper was presented at the Middle East Economic Association (MEEA) meetings in conjunction with the ASSA Conference, San Francisco, in January 2016. We are grateful to Mine Cinar and the participants of the MEEA for their invaluable comments and to Yasin Kutuk for his invaluable assistance with the econometric analysis. Needles to state, none of them bears any responsibility for the results and views expressed in the paper.

This paper quests for the intrinsic complementarities among environmental pollution abatement, induced technological innovation to combat human-induced climate change, targeted expansions for green employment, and enhanced welfare through gains in private income. Utilizing data from the Turkish economy, we implement an applied general equilibrium model to study the synergies between environmental abatement instruments and policies towards sustaining green jobs. Our results are indicative that by a proper mix of environmental taxation and technological and institutional innovations, Turkey can serve as an example for a host of developing countries in setting the stage for a pro-employment and eco-friendly, sustained growth path. We further show that for the successful implementation of a carbon emissions mitigation strategy, elimination of the burden of existing labor taxes and factor market distortions are crucial. Our analysis suggests that complemented with a strategy of substitution of environmental taxes against the existing distortionary labor taxes, costs abatement on domestic income and employment could be negligible.

The objective of this paper is to provide an impact analysis of the macroeconomic consequences of the employment subsidization programs in Turkey implemented under the post-2008 crisis period. To this end, an applied general equilibrium model (of the computable general equilibrium–CGE variety) is utilized to investigate the production, incomes generation, and aggregate demand components of the domestic economy. The analysis highlights the rather limited returns to the subsidization package, and argues that much of this was due to the dis-equilibriating and fragile macroeconomic environment under the neoliberal policy framework. The massive drop of domestic savings; a severe mis-alignment in the real exchange rate causing significant appreciation of the domestic currency; rise of the external deficit and of foreign indebtedness along with a severe fall in the total productivity effort were different facets of this poor macroeconomic performance. Thus, an important message of the study is that, had the macroeconomic balances were maintained at their historical averages, and a more competitive exchange rate could have been pursued, as much as threefolds of a gain in aggregate employment could have been generated with the same intensity of the employment subsidization package, in comparison to the historically realized levels. © 2016 Informa UK Limited, trading as Taylor & Francis Group.

Acar, Sevil/0000-0001-5535-8673; Acar, Sevil/0000-0001-5535-8673; Yeldan, A. Erinc/0000-0002-3123-4374 WOS:000370104500001 In this study we aim at providing an analytical framework for Turkey to study the macroeconomics and environmental impacts of the existing coal subsidization scheme. To this end we develop a regionally differentiated applied general equilibrium model spanning over 2015-2030. Our analytical apparatus focuses exclusively on the fiscal implications as well as the environmental repercussions of the removal of the subsidies on greenhouse gas emissions. With the aid of a set of alternative policy scenarios against a "business as usual" path, we study the regional and sectorial performances of growth, employment, investment and capital accumulation, consumption/welfare and trade balance. Our results indicate that by simple elimination of the coal subsidization scheme, Turkey can reduce its aggregate gaseous emissions by as much as 5% without a significant loss in its GDP. (C) 2015 Elsevier Ltd. All rights reserved. Turkish Sciences Association (TUBITAK)Turkiye Bilimsel ve Teknolojik Arastirma Kurumu (TUBITAK) [114K941] Paper prepared for presentation at the 18th Annual Conference of the GTAP, Melbourne, June 2015. This study has been supported by a grant from the Turkish Sciences Association (TUBITAK) under Project no. 114K941. We are grateful, without implicating, to Ebru Voyvoda for her comments and suggestions, and to two anonymous reviewers of this journal for their diligent guidance and critiques.

The global capitalist economy is experiencing its hardest and longest crisis since the 1929 Great Depression. Initially dismissed, in the summer months of 2007, as mostly a routine financial turbulence, the crisis conditions accelerated slowly, to turn into a prolonged “great recession”. What is more revealing in this conjuncture is that the current crisis had not been initiated in the so-called emerging markets of the global periphery, but erupted directly in the hegemonic centers of the capitalist world. What lies at the root of the crisis is not the usual common accusations of “corrupt” governments of crony capitalism, with their over-interference to the market rationality, but the upfront irrational exuberance of the “free” markets, with their unfettered workings guided by the private profit motive.

Our purpose in this paper is to establish stylized facts of the Turkish macroeconomic adjustments using data from 1969 to 1999. We adopt a traditional a priori definition of business cycles as cyclical co-movements of economic variables such as public, private and construction investments, trade balance, labour productivity, wages and fiscal accounts with the cyclical component of real GDP. We also incorporate in our analysis an investigation of the cyclical components of exchange rates, interest rates, price inflation, and the monetary aggregates. Our quantitative findings reveal a robust and significant positive relationship between public and private investments and real GDP growth, suggesting the presence of “crowding in” effects of public investment. Trend growth of manufacturing wages and average labour productivity are loosely associated over the whole period, and the rapid gains in productivity in the post-1980 reform era are not observed to be materialized as gains in remunerations of wage labour. We also find a significant negative correlation of manufacturing wages with merchandise exports and the exchange rate; and document further evidence of the strong negative correlation between variations in consumer prices and production.

We introduce and explore a general equilibrium model with R&D-driven endogenous growth, whose antecedents are the models of Romer (1990) [Romer, P.M., 1990. Endogenous technological change. Journal of Political Economy, 98, S71-102] and Grossman and Helpman (1991) [Grossman, G.M., Helpman E., 1991. Innovation and Growth in the Global Economy, The MIT Press, Cambridge]. Utilizing evidence front recent econometric studies on sources of growth, the model also accounts explicitly for cross-border technological spillovers. The model is specified and calibrated to data from Japan, and is solved to obtain both the transitional and the steady-state equilibria. We explore the effects of selective trade and R&D promotion policies on long-run growth and social welfare. The model results suggest that while a strategic trade policy has little effect on re-allocating resources into domestic R&D activities, it can significantly affect the cross-border spillovers of technological knowledge, which, in turn, stimulates growth. We find that trade liberalization may cause the growth rate to fall and lead to a loss of social welfare in the long-run, although it improves welfare in the short-run. R&D promotion policies stimulate growth by inducing private agents to allocate more resources to domestic R&D, as well as to take greater advantage of global R&D spillovers. Here, we find significantly high growth effects together with sizable gains in social welfare at low incidence to tax payers. (C) 1999 Elsevier Science B.V. All rights reserved.

We utilize a multi-sector general equilibrium model based on intertemporally optimizing agents to study issues of trade liberalization and fiscal adjustments in the context of the Turkish economy. A key feature of the model is its explicit recognition of the distortionary consequences of excessive borrowing requirements of the public sector through increased domestic interest costs. The model results suggest that the postponement of adjustment to growing public debt and fiscal imbalances could be detrimental; and that in the absence of coordinated fiscal reforms, the welfare gains expected from trade liberalization may significantly be negated.

We use a dynamic general equilibrium model based on intertemporally optimizing agents to study alternative debt management policies for the Turkish economy. The model is based on the neoclassical growth theory in its adjustment to steady state dynamics, and on Walrasian general equilibrium theory of a small open economy in attaining equilibrium in its commodity and factor markets. Key features of the model are its explicit recognition of the distortionary consequences of excessive borrowing requirements of the public sector through increased domestic interest costs; and endogenous determination of the private work force participation decisions in response to changing tax incidences. The model results suggest that reliance on indirect taxes, as in the current stance of the fiscal authority, has appealing results in terms of attaining fiscal targets, yet it suffers from distortionary consequences and loss of economic welfare.

The effects of recent Turkish financial liberalization reforms on the real economy are investigated with the aid of a computable general equilibrium model that incorporates financial markets. The model is used for conducting counterfactual and comparative static simulation experiments to analyze three sets of issues: (1) the real side effects of the government's mode of financing its fiscal deficit through debt instruments or monetization; (2) the effects of deregulation of the public debt instrument issuing rules on the financial markets; and (3) the domestic implications of the continued external debt servicing and the foreign exchange rate devaluations. (C) Society for Policy Modeling, 1997

The paper analyses the structural causes of the recent Turkish inflationary episode. It is argued that monetary policies based on credit tightening alone are not likely to yield the desired target of price stabilisation. Instead. it is hypothesised that the underlying sources of price inflation are affected by income inequality and conflicting claims on national output; and that excessive credit expansion serves mainly to accommodate the inertial inflation thereby originated in the real sector. Given this hypothesis. the paper employs a computable general equilibrium model to investigate four distinct sources of structural inflation for the Turkish economy: (i) the profit/rent inflation based on monopolistic mark-Ups over prime costs; (ii) imported inflation due to the import-dependent structure of the domestic industry; (iii) cost-push and demand inflation due to urban wage claims; and (iv) inflation that results from the fiscal pressures of the government's budget deficits. The general equilibrium model is in the Keynesian tradition in determining the production level by aggregate demand constraints. Furthermore. it accommodates oligopolistic mark-up rules and working capital expenses for price determination. and nominal wage fixity to determine the level of employment. The general equilibrium analysis of the macro economy suggests that. over the analysed period. conflicting claims of various social classes on national output and conflicting rates of intersectoral accumulation warranted by competing producer groups have become important sources of disequilibria in the domestic economy; and that the distributional conflict among socio-economic classes had a direct impact on the formation of price movements.

[No abstract available]

CGE modelling has dominated analysis of the impact of external liberalisation on poverty. This article provides a structuralist critique of standard neo-classical CGE models. It highlights five sets of gaps and partial achievements in the modelling of issues affecting the poverty impact of macroeconomic policies: duality and structural rigidities; efficiency gains and quota rents; the investment and savings specification; the nature of public expenditures; and the modelling of financial fragility, risk premia and issues of credibility. It outlines a model that makes it possible to analyse more plausible stories about the impact of both current and capital account liberalisation and questions the realism of existing approaches to ex-ante poverty impact assessment. For many if not most developing countries, external liberalisation has been the overriding theme in economic policy for the past two decades. The details of implementation, such as sequencing and coverage, have varied between countries. However, in broad terms liberalisation has meant the following: the dismantling of policy instruments that regulate and restrict commodity trade – reducing or outright dismantling of the government’s capacity to subsidise rural income through price supports and input subsidies; price liberalisation; privatisation of public assets; deregulation of labour markets; movement towards a flexible (and ultimately floating) exchange-rate administration; and finally, on the financial side, deregulation of the financial asset markets, freeing interest rates, and ultimately liberalising the capital account of the balance of payments to enable free capital mobility internationally. Corresponding to these policy shifts, world trade (measured in terms of nominal exports of goods and services) more than tripled from US$2.3 trillion in 1985 to over US$7.8 trillion in 2002, inflows of foreign direct investment (FDI) rose more than ten-fold

Turkey has initiated its process of liberalization and integration with the world commodity and financial markets in January, 1980. With an over-reaching reform agenda, first the existing system of multiple exchange system was eliminated and a managed floating foreign exchange regime was enacted. An extensive direct subsidization scheme was introduced to promote exports. In the meantime, commodity markets were liberalized and a vigorous price reform was implemented.

In this paper we investigate the distributional consequences of the post-1980 accumulation patterns and technological change in the Turkish manufacturing industries. We utilise two quantitative techniques. First, we make use of the Hodrick-Prescott filter to disintegrate the cyclical variations in productivity growth and wage rates from their respective historical trends, and study the evolution of the wage cycle against the long term productivity patterns in the sector. Next, we decompose the fundamental characteristics of the contributions of productivity growth of the manufacturing sub-sectors to the overall total. Our results suggest very little structural change in the sectoral composition and nature of productivity advances under the post-1980 structural adjustment reforms and outward-orientation, and underscore that the gains in productivity in this period did not materialise as gains in remunerations of wage labour. Contrary to the prognostications of the orthodox theory, the post-1980 export orientation of Turkish manufacturing was not found to lend itself to productivity contributions, and could not be sustained as a viable strategy of 'export-led industrialisation'.

The globalization of world capitalism constrains the ability of the developmental state to pursue an independent industrialization and foreign trade strategy. We use an intertemporal, multiregion CGE model, to study the fundamental reasons for a financial crisis. We find that we can create a realistic crisis in the Asia region when capital markets are open and there is an unexpected rise in the risk premium of the Asia region. When capital markets are closed and the state retains all its policy instruments, the Asia region not only avoids a crisis but increases its rate of growth. (C) 2000 Published by Elsevier Science Ltd. All rights reserved.

This paper investigates the impact of the Turkish public sector imbalances on the evolution of the economic crisis during 1990-93. A computable general equilibrium model is used. The theoretical basis of the model rests upon the strucutralist/Keynesian macro foundations. Its distinguishing features entail accommodation of oligopolistic market-up pricing rules in the industrial sectors, and endogenous solution of capacity utilisation and unemployment levels through Keynesian mechanisms of effective final demand. The results of the model underscore the importance of intra-class relations of income distribution and conflict in the evolution of price movements in the Turkish economy. It is further argued that the sources of the crisis lie in the administrative interventions of the state towards protection of the capitalist and rural incomes, which would otherwise be squeezed out in favour of wage-labour in the early 1990s.

We highlight an example of considerable bias in officially published input-output data (factor-income shares) by an LDC (Turkey), which many researchers use without question. We make use of an intertemporal general equilibrium model of trade and production to evaluate the dynamic gains for Turkey from currently debated trade policy options and compare the predictions using conservatively adjusted, rather than official, data on factor shares. We show that the predicted welfare gains are not only of a different order of magnitude, but in some cases, of a different sign, hence, suggesting contradictory policy recommendations.

Based on the classical notion that resolution of the distributional conflict preceded accumulation and production, the paper addresses the changing patterns of surplus creation and extraction under Turkish structural adjustment of the 1980s. Four overlapping mechanisms of surplus extraction that span the adjustment period are identified, and the position of capital toward wage-labor, peasantry, the foreign economy and the state is discussed.

The article searches for a viable alternative for Turkey's economy to resolve its current confrontation with the dilemma of stabilization and growth. With the aid of a dynamic, computable, general equilibrium model, it is argued that an integrated, industrialization strategy that combines a domestic-demand-based, wage-goods-oriented public investment program with a selective export-promotion scheme promises to be the most appropriate one serving Turkey's long-term industrialization interests. The model results further emphasize the pressing need for the revitalization of the domestic demand and the importance of the agricultural productivity growth in promoting Turkey's overall objectives of industrialization, income equity, and foreign trade over the Fifth and Sixth Plan periods.