Stability of Hot Money Inflows Components

Abstract

Turkish economy may have removed restrictions on capital movements and within this context it has integrated the international economy since the 1980s. The level of dependence on the outside of the country's economy has increased, macroeconomic indicators have deteriorated, economic crises have occurred, and a more fragile structure against external shocks has emerged. In this study, stability of hot money movements components which have a fragile structure from speculative capital movements' components in Turkey and the relationship with economic growth have tried to be presented econometrically with the help of the quarterly data for the period between 1998-2017. Longterm cointegrated relationship between the components of the hot money movements and economic growth, and one-way causality relationship from the related components to economic growth is obtained. Vector Error Correction model has shown that the long-term relationship between the components of hot money movements and economic growth provides a temporary stability.