COMPARING 1994, 2001 AND 2008 CURRENCY CRISES IN TURKEY

This paper is comparing the currency crises in Turkey for 20 years (from 1990 till today) and to distinguish their causes divided in three periods (1990-1995), (1995-2002) and (2002-2009). My goal is to compare these incidents to find similarities and differences among them for the very first time for the country’s analysis. The forward spread is selected as a dependent variable along with a set of independent macroeconomic and social variables (balance of payments, crisis elsewhere, real effective exchange rate, foreign exchange reserves, gold price, lending rate, money, external debt and consumer price level) examining these variables for a twenty year period (January 1990- December 2009) the largest set availiable in refered literature I examined their relation to the forward spread, following the feasible least squares methodology. This innovative approach is used for the first time in the field and it has the major advantages of least squares methodology along with panel data analysis flexibility. The results show that the crisis of 1994 had to do with fundamentals (first generation theoretical framework), the 2001 crisis with economic condition and policy (modified first generation) and the 2008 crisis with contagion and the global credit crunch (third generation).None of these crises were linked as previous works mentioned and the 2008 turbulence can be rated as a crisis according to my criteria.