World Economy Individual Assignment :

1022 Words Mar 4th, 2016 5 Pages
World Economy Individual Assignment-Baris Kayacan
Fast economic conversion that Turley experienced after 1980 has made a significant effect on country’s whole economy and especially removal of obstacles in front of capital movements and integration of the country with global economy has increased the importance of financial sector as a whole . But this fast conversion made the economy vulnerable to crisis and Turkish economy experienced two devastating economic crisis in post 1980 era. In this report I will describe most recent economic crisis that occurred in 1994 and 2001.
1- 2001 Financial Crisis in Turkey
1.1- Overview
After experiencing high inflation and interest rates and fluctuating growths in 1990’s, Turkey launched a new disinflation program in 1999. This new disinflation program, which was backed by IMF, aimed to decrease the inflation to single digit rates at the end of 2002 and intended to increase the public-sector primary balance to %3,7 at the end of 2000 (Yeldan September 2001). Inflation rate target was anchored to pre-announced crawling peg exchange rate regime and program projected a gradual move towards flexible exchange rate in July 2001. Public sector primary surplus aimed to be attained by implementing a tight fiscal policy including additional taxes and cuts in public spending (Akyüz and Boratav April 2002).
Celasun states that exchange rate based economical programs are credible if inflation is strongly related with exchange rates. It was expected…
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