Debt sustainability and the exchange rate: The case of Turkey

Keyder, Nur
The paper attempts to estimate the primary surplus requirement for debt sustainability in Turkey, taking into consideration not only the operational deficit and seigniorage factors but also the exchange rate factor. In estimations, a modified version of the approach suggested by the World Bank (World Bank, 2000, “Turkey-Country Economic Memorandum-Structural Reforms for Sustainable Growth, Vol. I and II”, Report No. 20657-TU, Washington, DC, 16-18; 121-4) is used. The analysis is carried out in two steps. First, the real interest rate is estimated and then the results are plugged into the primary surplus equation. The exchange rate factor is taken up during the estimation of the real interest rate in TL, on FX-related debt. The debt sustainability issue is evaluated by comparing the estimated primary surplus-to-GNP ratios required for debt sustainability, with the targeted primary surplus ratio, taking into consideration the real interest rate and composition of the existing debt stock.


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Alper, Koray; Gaygısız Lajunen, Esma; Department of Economics (2003)
In this study, determinants and the evolution of the exchange rate passthrough to domestic inflation in the Turkish economy is analyzed. The analyses cover the 1987-2003 period. In the analyses, single equation أError Correction Modelsؤ are used to estimate the exchange rate pass-through. Estimation results suggest that alike other emerging countries, the degree of exchange rate passthrough to domestic prices is high and the pass-through is completed in a very short time span. Estimations results also indic...
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Tekin-Koru, A; Ozmen, E (2003-03-01)
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Özen, Emine Özgü; Akbostancı Özkazanç, Elif; Department of Economics (2011)
The question of exchange rate pass-through into domestic inflation is a widely analyzed issue due to its importance as regards to monetary policy, exchange rate policy and in general macroeconomic policy for open economies. Although most of the literature is focused on the exchange rate pass-through at the aggregate level, there are fewer studies that are done at the sectoral level for the Turkish economy. In this study by using a distribution chain of pricing model developed by McCarthy (2000), pass-throug...
Citation Formats
N. Keyder, “Debt sustainability and the exchange rate: The case of Turkey,” ODTÜ Gelişme Dergisi, vol. 30, no. 1, pp. 35–60, 2003, Accessed: 00, 2020. [Online]. Available: