Macroeconomic Policies for EU Accession

Macroeconomic Policies for EU Accession

Edited by Erdem Başçı, Sübidey Togan and Jürgen von Hagen

What macroeconomic requirements must Turkey meet in its quest to accede to the European Union? This book, with its distinguished contributors – well-known economists and policymakers – examines and analyses these macroeconomic challenges confronting Turkey. Although the focus is on the specific situation of Turkey, the lessons are informative for other candidate countries and the findings directly relevant to the process of European integration.


Manfred J. M. Neumann

Subjects: economics and finance, financial economics and regulation


Manfred J.M. Neumann Sübidey Togan and Hasan Ersel are to be complimented for providing us with a very informative study of Turkey’s balance of payments problems and the implications of an attempt at reducing the current account deficit by devaluing the Turkish lira. The authors show that Turkey’s current account has deteriorated during recent years while the lira has appreciated in real terms. They argue that the present state of the current account is not sustainable but needs correction. Consequently, they propose to devalue the lira by a sizeable margin and to this end to abandon the current system of an independent float in favour of a managed float or alternatively a crawling exchange rate band. To be sure, this is a strong policy message that requires careful evaluation. In this comment I will first use a few economic indicators in order to characterize the macroeconomic developments of the 1990s and the current state of affairs; next I will discuss the authors’ analysis of current account sustainability and the issue of the controllability of the real exchange rate; and finally I will draw a few policy conclusions. On my reading of the data, I am not convinced that a major change of exchange rate policy is advisable. 9C.1 Macroeconomic Assessment The main macroeconomic characteristics of the Turkish economy can be read from Table 9C.1 where the first column summarizes the average performance of the 1990s up to 1998 and the additional columns provide more detailed information on...

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