The Effects of Exchange Rate Regime Choice on Economic Performance: The Case of Turkey

Abstract

This study analyses the exchange rate regimes and stabilization programs applied by Turkey in the last two decades.Through these analyses, some important points, widely debated in the literature, are questioned. Three important conclusions, which are consistent with the general consensus in the previous literature, are reached; (1) Disparities in the values of the economic factors, namely exchange rate, inflation and interest rates, are very dangerous and disturbs the balance of the economy and makes it vulnerable to economic crisis, (2) even though the choice of the exchange rate regime is very important, it is not the only factor that leads to economic crisis, and finally (3) each exchange rate regime has advantages and disadvantages compared to others, so it is hard to conclude that one is more appropriate than others for an economy.