How Geopolitical Risks Influence Real Exchange Rate Dynamics in Turkiye? Evidence from Fourier Cointegration Test with Non-Normal Errors
Küçük Resim Yok
Tarih
2025
Dergi Başlığı
Dergi ISSN
Cilt Başlığı
Yayıncı
Editura Ase
Erişim Hakkı
info:eu-repo/semantics/openAccess
Özet
Turkiye is one of the countries that directly and significantly affected by geopolitical risks due to its strategic location. However, the impact of these risks on the real exchange rate-one of the key determinants of macroeconomic stability-remains unclear. This study aims to address this gap in the literature by examining the effects of geopolitical risks on real exchange rate dynamics in Turkiye. In doing so, it also considers essential factors such as terms of trade, real interest rates, and productivity, which are fundamental components of real exchange rate models. The analysis covers quarterly data from 2000:Q] to 2024:Q] and employs the newly developed RALS Fourier ADL cointegration test, which offers a robust methodological framework. The findings reveal that geopolitical risks causes to depreciation in Turkiye's real exchange rate. Specifically, heightened geopolitical risks lead to capital outflows as investors postpone investment decisions, disrupt portfolio investments, and create inflationary pressures. These dynamics result in higher demand for foreign exchange, ultimately driving up the real exchange rate. The study highlights the crucial role of geopolitical risks in modelling Turkiye's real exchange rate. If policymakers estimate exchange rates without accounting for these risks, their assessments may yield misleading results.
Açıklama
Anahtar Kelimeler
Geopolitical Risk, Reel Exchange Rate, Fourier Adl Cointegration Test
Kaynak
Economic Computation and Economic Cybernetics Studies and Research
WoS Q Değeri
Q3
Scopus Q Değeri
Q3
Cilt
59
Sayı
3
