NOTES
- 2001 . Russian and East European Finance and Trade , 37 ( No.6 ) : 54 – 75 . These rates occurred during the Nov. 2000 and Feb. 2001 crises. See C. Emre Alper, “The Liquidity Crisis of 2000: What Went Wrong,”
- 2000 . 67 – 91 . Under the stabilization program of Dec. 9, 1999, the exchange rate was used as a nominal anchor to reduce the inflation rate during the Jan.–Feb. 2001 period. For an extensive review of the issue of the exchange rate regime choice for Turkey, see C. Emre Alper and Kamil Yilmaz, “Domestic Needs for Foreign Finance and Exchange Rate Regime Choice in Developing Countries, with Special Reference to the Turkish Experience,”pp. of this volume
- As of Aug. 2002 the domestic debt stock of the public sector in cash basis, which constitutes 56.2 percent of the domestic debt stock of the public sector, has an average maturity of 14.3 “months.” Comparable figures are expressed in “years” for developed countries
- Economies subject to multiple equilibria are heavily influenced by the changing sentiment of the market. With no discernible change in their economic fundamentals, such economies can be oscillating between the good and the bad equilibria solely because of agents' changing sentiment and expectations, which mostly stem from anticipated policy changes or perceived lack of resolution on the part of economy administrations
- 2001 . Contributions to Macroeconomics , 1 : 1 – 23 . For a discussion of these issues for developing countries, see William Easterly, “Growth Implosions and Debt Explosions: Do Growth Slowdowns Cause Public Debt Crises?,”, No. 1 John T. Cuddington, “Analyzing the Sustainability of Fiscal Deficits in Developing Countries,” World Bank Policy Research Working Paper No. 1784 (1997), pp. 1–47. For developed countries, see Merih Uçtum and Martin Wickens, “Debts and Deficit Ceilings, Sustainability of Fiscal Policies: An Intertemporal Analysis,” Oxford Bulletin of Economics and Statistics Vol.62, No.2 (2001), pp. 197–221
- Anand , Ritu and Van Wijnbergen , Sweder . 1989 . “Inflation and the Financing of Government Expenditure: An Introductory Analysis with an Application to Turkey,” . World Bank Economic Review , 3 ( No.1 ) : 17 – 38 . See Kivilcim Metin, “The Relationship between Inflation and Budget Deficit in Turkey,” Journal of Business and Economic Statistics Vol.16, No.4 (1998), pp. 412–21
- Özatay , Fatih . 2000 . “The 1994 Currency Crisis in Turkey,” . Journal of Policy Reform , 3 ( No.4 ) : 327 – 52 . See O. Cevdet Akçay, C.E. Alper, and Süleyman Özmucur, “Budget Deficit, Inflation, and Debt Sustainability: Evidence from Turkey (1970–2000),” in Aykut Kibritçioğlu, Libby Rittenberg, and Faruk Selçuk (eds.), Inflation and Disinflation in Turkey (Aldershot: Ashgate, 2002), pp. 77–96
- 2001 . Russian and East European Finance and Trade , 37 ( No.6 ) : 6 – 30 . For a review of these developments, among others, see Ahmet Ertuğrul and Faruk Selçuk, “A Brief Account of the Turkish Economy: 1980–2000,”,C. Emre Alper and Ziya Öniş, “Soft Budget Constraints, Government Ownership of Banks and Regulatory Failure: The Political Economy of the Turkish Banking System in the Post-Capital Account Liberalization Era,” Boğaziçi University Working Paper ISS/EC 02–02 (2002);C. Emre Alper and Ziya Öniş, “Financial Globalization, the Democratic Deficit and Recurrent Crises in Emerging Markets: the Turkish Experience in the Aftermath of Capital Account Liberalization,” Emerging Markets Finance and Trade Vol.39, No.3 (2003), pp. 5–26
- 1983 . Federal Reserve Bank of Minneapolis Quarterly Review , 7 ( No.1 ) : 8 – 19 . For an elaboration on these issues, see Paul J. Miller, “Higher Deficit Policies Lead to Higher Inflation,”,William Easterly and Stanley Fischer, “The Economics of the Government Budget Constraint,” World Bank Research Observer Vol.5, No.2 (1990), pp. 127–42
- A rise in the budget deficit could alternatively lead to deterioration in the current account with private investment staying intact. However, in this case the link is a bit ambiguous as the monetary policy accompanying the fiscal expansion becomes crucial. If monetary policy is “contractionary,” it increases the interest rate and pushes up the exchange rate, leading to a depreciation of the currency. This depreciation, in turn, improves the current account balance rather than worsening it along with the higher budget deficit
- 1981 . Federal Reserve Bank of Minneapolis Quarterly Review , 5 ( No.3 ) Fall : 1 – 17 . See Thomas Sargent and Neil Wallace, “Some Unpleasant Monetarist Arithmetic,” (pp. Sargent and Wallace point to a “seemingly” perverse situation in which tighter monetary policy (implying fiscal deficit financing through borrowing) may actually lead to an increase in the current inflation rate under certain assumptions
- 2001 . 1 – 23 . See Easterly
- 2002 . 77 – 96 . The analysis will be based on Akçay et alpp., andUçtum and Wickens 2001 pp. 197–221
- 2002 . 82 – 3 . Excluding the foreign currency-denominated bond and the exchange rate variables, the derivation is available in Akçay et al
- 2001 . 1 – 23 . For the recent cross-country evidence on the relation between growth and public deficits, see Easterly
- Turkish Audit Court . Year 2000 Fiscal Report The report can be accessed (in Turkish) at <http://www.sayistay.gov.tr/rapor/DIGER/2000malirapor.pdf>
- 2003 . For a detailed analysis of fiscal and political developments in the post-capital account liberalization era, see Alper and Öniş
- Akçay . 2002 . 88 See p
- Floating rate notes (FRNs) are borrowing instruments which the Treasury uses. In that respect they are similar to discount bonds but, unlike discount bonds—which have fixed rates of return at maturity, FRNs have changing rates and quarterly coupon payments. The payment for each coupon is decided by a reference auction prior to the payment, and market sentiment largely determines the rate of return in these auctions like in any other auction. When an improving market sentiment is in effect, the Treasury can easily capitalize on it and borrow at successively lower rates, and, naturally, exactly the opposite holds when things turn sour
- Ex ante real interest rate is the expected real interest rate given the current nominal interest rate and expected inflation. More formally, r = (1+ i)/(1+ e)—1, where r is the ex ante real interest rate, i is the nominal interest rate, and e is expected inflation
- As devaluation and the ensuing rapid depreciation of the currency explodes the FX component of the debt stock and reduces the GDP in real terms at the same time, changes in both the numerator and the denominator of the debt stock/GDP ratio will exert an upward pressure on the ratio. The GDP response and offsetting appreciation of the local currency comes with a lag, and—to avoid the excessive fluctuation in numbers—GDP for any given year is defined with a certain delay, hence part of the following year is included in the current year's GDP. In this case, the delay was chosen as two quarters