Financial market participation and business cycles in Turkey

Özsoy, Sertan (2021) Financial market participation and business cycles in Turkey. [Thesis]

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This study examines the effect of limited financial participation on business cycle characteristics of emerging market economies using the model of Özbilgin (2010), where the standard small open economy business cycle model is extended to include heterogeneous agents that are differentiated by their ability to borrow and accumulate capital. First, I document that developing countries have less financial market participation than advanced economies. I then calibrate this model to the Turkish economy and analyze the effect of changes in the level of financial inclusion on business cycle characteristics. The results show that having higher financial inclusion, similar to the levels of advanced economies, results in higher consumption smoothing and lower countercyclicality of the trade balance. I also extend the model by adding interest rate shocks and show that the combined model matches business cycle statistics better than the limited participation model
Item Type: Thesis
Uncontrolled Keywords: Small open economy. -- Business cycles. -- Financial development. -- Küçük dışa açık ekonomi. -- Reel iktisadi dalgalanmalar. -- Finansal gelişim.
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Arts and Social Sciences > Academic programs > Economics
Faculty of Arts and Social Sciences
Depositing User: IC-Cataloging
Date Deposited: 17 Sep 2021 10:47
Last Modified: 26 Apr 2022 10:38

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