Abstract
The Relationship Between Short Term Investments and Real Exchange Rate in Turkey
The relationship between real exchange rate and Short-Term Investments in Turkey’s economy was analyzed in this study by the help of causality analysis. In this study, monthly data for the period of 2003:01-2014:03 was examined by using TCMB.
Whether the data disclose each other or not was evaluated considering Akaike and Schwarz information criteria. It was found out that there is a bi-directional causality relationship between real exchange rate and short-term investments. The breakage of this bidirectional
relationship depends on both the stability of the real exchange rate and the shortterm
speculative investments’ removal of being attractive by the foreign investors. The general
structure of the economy is not suitable for preventing the short-term instability by itself. The main problem can be expressed in the way that the necessary precautions which has the ability to complete the capital factor that is missing with structural transformation through its own internal dynamics of the economy.
Keywords
Real Exchange Rate, Short-Term Investments, Turkey’s Economy, Causality Analysis.
