Assessing the Value of the (New) Turkish Lira
5 Pages Posted: 4 Jan 2017
Date Written: June 30, 2007
Observing that the Turkish Lira has appreciated against the US Dollar in the recent years in spite of the higher inflation rate in Turkey brings a question about the applicability of PPP to Turkish case. We provide Turkish Balance of Payments, an indicator of funds flow, as an explanatory factor for the changes in the YTL/USD exchange rate. Both models used, with Balance of Payments and without, reveals that PPP does not hold between Turkey and the US for the time period examined.
Keywords: PPP, Exchange Rate
JEL Classification: F31
Suggested Citation: Suggested Citation