世界发展银行-Turkey-_-An-Empirical-Assessment-of-the-Determinants-of-the-Current-Account-Balance_42页_1mb

Summary of "An Empirical Assessment of the Determinants of the Current Account Balance" (Policy Research Working Paper 8982)

Core Content

This paper provides an empirical analysis of the determinants of Turkey's current account balance (CAB) from 1986 to 2017, using a jackknife model-averaging estimator. The study aims to understand the factors driving current account imbalances, particularly the current account deficit (CAD), and assess their sustainability. It also explores the implications of these imbalances for Turkey's economic policy and external stability.

Main Views and Key Findings

1. Evolution of Turkey's Current Account

• Turkey moved from a relatively balanced current account in the early 1980s to a sustained CAD of about 4.5% of GDP since 2002.
• The CAB is relatively volatile, influenced by business cycle trends and year-to-year fluctuations.
• Turkey's CAD is comparable to the average of upper-middle-income countries (UMICs), but slightly higher than non-natural resource-dependent UMICs.

2. Determinants of the Current Account

The paper identifies several key determinants of the CAB:

• Private sector credit: Particularly to households and later to the corporate sector, has played a significant role in financing the CAD.
• Real exchange rate (REER): A critical factor influencing the CAB, with a downward trend since 2010.
• GDP growth: Relative to the rest of the world, has contributed to the CAD.
• Trade openness: While Turkey's trade openness has not increased significantly since 2001, its trading partners have become more open, widening the gap.
• Energy import dependence: A major contributor to the CAD, especially due to rising oil prices.
• Savings-investment gap: Driven by low national savings and high investment, particularly in capital goods and intermediates.
• International oil prices and global uncertainty: Have had a notable impact on the CAB, especially through energy imports and external financing conditions.

3. Sustainability of the CAD

• The sustainability of the CAD depends on whether the country can generate sufficient surpluses in the future to repay its foreign liabilities.
• While some studies suggest the CAD is sustainable under certain conditions, others argue it is not, highlighting the importance of external financing and macroeconomic stability.
• The IMF's 2018 External Balance Assessment indicates that Turkey's current CAD is higher than warranted by fundamentals.

4. Impact of Global Financial Conditions

• The CAD has been financed by both long-term and short-term flows, with a growing reliance on volatile short-term financing since the 2008-09 financial crisis.
• The global financial crisis (GFC) led to a surge in capital inflows to emerging markets and developing economies (EMDEs), which helped sustain the CAD, but also increased exposure to financial instability.

5. Policy Implications

• The paper emphasizes the need for policies that can mitigate the risks associated with large and continuous current account deficits.
• It highlights the importance of maintaining macroeconomic stability, managing external financing, and reducing import dependence, especially for energy.

Key Information

• Methodology: The paper uses a jackknife model-averaging estimator to identify the determinants of the CAB, addressing endogeneity and small-sample issues.
• Time Period: Analysis covers 1986 to 2017, making it the longest quantitative, multi-variate study on Turkey's CAB to date.
• Data Sources: IMF World Economic Outlook, Central Bank of Turkey, Haver Analytics, and OECD.
• Main Drivers of the CAD:
  • Expansion of household and corporate credit.
  • Rapid GDP growth relative to the rest of the world.
  • Improved macroeconomic stability.
  • Energy import dependence.
  • High import costs and low national savings.
• Volatility and Sustainability: The CAB is volatile and the CAD has become more persistent over time, raising concerns about its sustainability.
• Role of External Financing: Turkey has increasingly relied on short-term capital flows, which are more volatile and less stable than long-term financing.

Structure of the Paper

• Section I: Provides context, including a detailed descriptive trend analysis of Turkey's CAB and its components.
• Section II: Presents the econometric results and analysis of the determinants of the CAB.
• Section III: Sets out forecast scenarios and sensitivity analysis, exploring future implications of the determinants on the CAB.

Conclusion

The paper underscores the complexity of Turkey's current account dynamics and the need for a nuanced understanding of the underlying factors. It highlights the importance of macroeconomic stability, structural reforms, and prudent management of external liabilities to avoid potential imbalances and financial crises.