Turkey's Distressing Dance With Capital Flows

Abstract

In the aftermath of the 2001 crisis, Turkey took important steps toward achievingmacroeconomic and financial stability. Together with favorable international financial conditions, this helped to achieve a high per capita GDP growth. The high-growth period failed to be sustainable, however. From 2008 to 2013, Turkey had a volatile and low growth. In this article, I aim to analyze the underlying reasons of high volatility of growth and discuss short-term economic policy alternatives to mitigate such undesired fluctuations.