Dollarization and its Long-run Determinants in Turkey
This chapter explains dollarization process in Turkey by an extended portfolio model where dollarization is determined by the relative rates of return of domestic and foreign currencies denominated assets, expected change in the exchange rate, exchange rate risk, and credibility of current economic...
Saved in:
| Published in | Money and Finance in the Middle East: Missed Oportunities or Future Prospects? Vol. 6; pp. 201 - 232 |
|---|---|
| Main Author | |
| Format | Book Chapter |
| Language | English |
| Published |
Emerald Group Publishing Limited
2005
|
| Online Access | Get full text |
Cover
Loading…
| Summary: | This chapter explains dollarization process in Turkey by an extended portfolio model where dollarization is determined by the relative rates of return of domestic and foreign currencies denominated assets, expected change in the exchange rate, exchange rate risk, and credibility of current economic policies. The econometrics results are in line with the intuitive predictions of the model. We have found that interest rate differential and the expected exchange rates are the dominant variables in determining dollarization. This chapter also provides evidence of inertia in the process of dollarization in Turkey. |
|---|---|
| ISBN: | 0762312165 9780762312160 |
| ISSN: | 1094-5334 |
| DOI: | 10.1016/S1094-5334(05)06010-3 |