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25/01/2019 - 21:30

Emerging Market Sovereign Spreads, Global Financial Conditions and U.S. Macroeconomic News

Fatih Özatay , Erdal Özmen and Gülbin Şahinbeyoğlu

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This paper investigates the impact of global financial conditions, US macroeconomic news and domestic macroeconomic fundamentals on the evolution of EMBI spreads for a panel of 18 emerging market (EM) countries using daily data. To this end, we employ not only the conventional panel data estimation procedures but also the recently developed common correlated effects panel mean group method which incorporates heterogeneity by allowing country-specific coefficients whilst accounting for the effects of common global shocks such as contagion. The results strongly suggest that the long-run evolution of EMBI spreads depends on external factors such as changes in global liquidity conditions, risk appetite and crises contagion. Domestic macroeconomic fundamentals proxied by sovereign country ratings are also found to be important in explaining the spreads. The results from panel equilibrium correction models suggest that EMBI spreads respond substantially also to US macroeconomic news and changes in the Federal Reserve’s target interest rates. The magnitude and the sign of the effect of US macroeconomic news, however, crucially depend on the state of the US economy, such as the presence of an inflation dominance.

Global Dynamics, Domestic Coalitions and a Reactive State: Major Policy Shifts in Post-War Turkish Economic Development

Ziya Öniş and Fikret Şenses

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The main objective of this study is to propose an analytical framework to explain the major policy shifts that has characterized post-war Turkish economic development; divided into four phases, starting respectively in 1950, 1960, 1980, and 2001. Its main contribution is to incorporate external and internal factors into this framework within a broadly political economy perspective, attaching particular significance to the role of economic crises in moving from one phase to the other. While the role of external agents is identified as the main factor behind policy shifts, the role of domestic coalitions in support of policy regime in each phase is also recognized. Drawing attention to the role of state in the impressive recent growth of countries such as China, India, and Ireland, the paper argues that there is still room for the state taking on a developmental role. The paper recommends that Turkey follows a similar path by improving state capacity not only with respect to its regulatory role but also in more developmental spheres, encompassing its redistributive and transformative role on the basis of a domestically-determined industrialization strategy.

Uluslararası Gelişmeler Işığında Türkiye Yükseköğretim Sistemi: Temel Eğilimler, Sorunlar, Çelişkiler ve Öneriler

Fikret Şenses

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Bu yazı, Türkiye yükseköğretim sistemine ilişkin tartışmalar çerçevesinde sistemin temel yapısal özelliklerini ana hatlarıyla değerlendirmekte ve sistemin son yılardaki hızlı genişlemesine ve karmaşık yapısına dikkat çekmektedir. Sistemin hedefleri arasındaki çelişkilere işaret edilmekte, karşılaştığı kimi temel sorunlar ana hatlarıyla incelenmekte ve çözümlerine yönelik olarak öneriler geliştirilmektedir. Sorunlar arasında, fırsat eşitsizliği, sistemin tek merkezden yönetilmesi, kendi içinde etkileşen bir akademik topluluk oluşturma güçlükleri ve araştırma gündeminin yerel anlamlılık yörüngesine oturtulamaması ön plana çıkarılmaktadır. Nicel hedeflere yönelimin nitelik üzerinde çeşitli alanlarda yarattığı olumsuz etkiler sistemin bugünkü hedeflerinin başlıca çelişkisi olarak değerlendirilmektedir. Yükseköğretim sistemini oluşturan kuruluşların hedefleri açısından farklılaştırılması, sistemin bu farklılaşma doğrultusunda ve bugünkü karmaşık yapının ortaya çıkardığı yönetim güçlükleri karşısında yeniden yapılandırılması ve fırsat eşitliğine, akademik özgürlüklere duyarlı, toplumla daha yakından ilişkili, eğitim süreçleri işgücü piyasalarıyla, araştırma gündemi toplumsal sorunlarla daha yakından ilişkilendirilmiş bir akademik ortamın oluşturulması çalışmada geliştirilen öneriler arasında yer almaktadır.

History Matters for the Export Decision Plant Level Evidence from Turkish Manufacturing Industry

Şule Özler , Erol Taymaz and Kamil Yılmaz

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In a dynamic panel data framework, we investigate the factors influencing the export decision of the Turkish manufacturing plants over the 1990-2001 period. Our results support the presence of high sunk costs of entry to export markets, as well as the hypothesis that the full history of export participation matters for the current export decision. We further show that the effect of the past export experience on current export decision rapidly depreciates over time: Recent export market participation matters more than the participation further in the past. Finally, we show that while persistence in exporting helps lower the costs of re-entry today, there are diminishing returns to export experience. Our results are robust to plant characteristics (plant size, technology, composition of the employment), the spillovers from the presence of exporters in the same industry, as well as industry and year effects.

Labor Market Outcomes, Capital Accumulation, and Return Migration: Evidence from Immigrants in Germany

Murat G. Kırdar

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In this paper I test the capital accumulation conjecture that is used to rationalize return migration decisions in the context of immigrants in Germany and examine how labor market outcomes influence return migration decisions, with particular attention to selection in these outcomes in return migration. I characterize the level and timing of return migration as well as the selection in it and derive a number of implications of these on the impact of immigrants on the host as well as source countries. Using a rich longitudinal dataset that has an over-sampled group of immigrants (German Socioeconomic Panel), I conduct a Cox proportional hazard analysis with alternative waiting-time concepts. That the sample contains immigrants from four different source countries allows me to utilize the variation in the source country characteristics as well as the time variation in them to identify the parameters of interest. I find evidence for the savings accumulation conjecture, in which return is motivated by higher purchasing power of accumulated savings in the home country. On the other hand, human capital accumulation conjecture is rejected. In the framework of savings accumulation, I examine the impact of an increase in German earnings whose theoretical impact on the return migration decision is ambiguous. In terms of labor market outcomes, both retirement and unemployment emerge as important determinants of return migration choices. Unemployment spell length determines the direction of selection with respect to unemployment in return migration. The data also reveal that the level of return migration is high and varies considerably across the source countries. The hazard function of Turkish immigrants displays a hump-shaped profile that peaks between the ages of 45 and 54 whereas EU immigrants are more likely to return at earlier ages and after retirement.

Regional Convergence and The Causal Impact of Migration on Regional Growth Rates

Murat G. Kırdar and Şirin Saraçoğlu

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The standard growth theory predicts that allowing for labor mobility across regions would increase the speed of convergence in per capita income levels and that migration has a negative causal impact on regional growth rates. Although the empirical literature has uncovered some evidence for the former implication, the latter has not been verified empirically. This paper provides empirical evidence for the negative causal impact of migration on provincial growth rates in a developing country with a high level of internal migration that is characterized by unskilled labor exiting rural areas for urban centers. We utilize instrumental variables estimation method with an instrument unique to the country examined and also control for provincial fixed effects.

Brain Drain from Turkey: An Investigation of Students’ Return Intentions

Nil Demet Güngör and Aysit Tansel

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The emigration of skilled individuals from Turkey attracted greater media attention and the interest of policymakers in Turkey, particularly after the experience of recurrent economic crises that have led to an increase in unemployment among the highly educated young. This study estimates a model of return intentions using a dataset compiled from an Internet survey of Turkish students residing abroad. The findings of this study indicate that, as expected, higher salaries offered in the host country and lifestyle preferences, including a more organized environment in the host country, increase the probability of student non-return. However, the analysis also points to the importance of prior return intentions and the role of the family in the decision to return to Turkey or stay overseas. It is also found that the compulsory service requirement attached to government scholarships increases the probability of student return. Turkish Student Association membership also increases return intentions. Longer stay durations, on the other hand, decrease the probability of return. These findings have important policy implications.