Unemployment, Exchange Rate and Exchange Rate Volatility Relation: Analysis for Turkey

Abstract

In previous studies, exchange rate fluctuations have been an important factor affecting real sector of economies as economies have become more open. Most studies have focused on its trade impact. However, through different channels, exchange rate movements can also influence unemployment. This study aims to analyze the effect of exchange rate and its volatility on unemployment for Turkey over the period from 2005 to 2019 by using quarterly data. As a solution for possible endogeneity problem, VAR analysis was performed. Results show that although exchange rate fluctuations do not affect unemployment, exchange rate volatility significantly increases unemployment. Therefore, different policy measures should be employed to reduce exchange rate volatility or its effect on unemployment or both.

Exchange Rate Policies from the Early Republic to the Present

“…(2018), Ahiabor & Amoah (2019), Kaur vd. (2019), Ehikioya (2019), Ahiabor & Amoah (2019), Karahan (2020), Özata (2020), Akarsu (2020), Morina vd. (2020), Ebghaei (2020), Comfort (2021), Mamun vd.…”