Murat Üngör

Has European Customs Union Agreement really affected Turkey's trade?

The numerous discussions regarding the advantages and disadvantages of Turkeys becoming a member of the Customs Union has been inconclusive. The empirical analysis that mostly focus on the changes in the volume of trade without much regard to the conjectural changes have also been insufficient. This study attempts to shed light on this issue in a formal analysis of Turkeys international trade by empirically accounting for the changes before and after the Customs Union Agreement (CUA). In doing so, we explicitly account for the concurrent changes in the macroeconomic environment that may have affected Turkeys trade with the rest of the world. Our empirical findings indicate that CUA has not only positively impacted on Turkeys trade, but also led to changes in the behaviour of both exports and imports with regards to their responsiveness to underlying variables.

AGRICULTURAL PRODUCTIVITY AND GROWTH IN TURKEY

This paper investigates the growth experience of one country in detail in order to enhance our understanding of important factors that affect economic growth. Using a two-sector model, we identify low productivity growth in the agricultural sector as the main reason for the divergence of income per capita between Turkey and its peer countries between 1968 and 2005. An extended model that incorporates distortions in the use of intermediate goods in producing agricultural output indicates that policies that have different effects across sectors and across time may be important in explaining the growth experience of countries.

Increasing Share of Agriculture in Employment in the Time of Crisis: Puzzle or Not?

In the first quarter of 2008, along with the beginning of the crisis, the employment share of agriculture in Turkey deviated from its long-run trend and started to rise. Both the timing and the direction of the change caused a public debate seeking an explanation of this phenomenon. Getting attention in the debate is the fact that labor productivity in agriculture has been declining since that quarter. How much of the increase in agricultural employment can be explained by the secular changes in its productivity? To answer this question, we use a multi-sector general equilibrium model in which employment share in agriculture is determined solely by the subsistence constraint and labor productivity in agriculture, where sectoral productivity growth rates are treated as exogenous. The model accounts for more than 90 percent of the decline in the agricultural employment share between 2000:Q2 and 2010:Q3. The model is also able to generate the increase in agricultural employment since 2008:Q1, although it slightly overpredicts the agricultural employment share. The model also predicts the sectoral allocations of labor in non-agricultural activities during the sample period. A detailed analysis of the driving forces of the growth in agricultural productivity is needed, since it lies at the heart of the secular changes in employment shares in Turkey.

Some thought experiments on the changes in labor supply in Turkey

Turkey has the lowest hours worked (the product of total employment and annual hours per worker, divided by the size of the working-age population) among the OECD countries. We study the changes in hours of work following Ohanian, Raffo, and Rogerson (Journal of Monetary Economics, 2008) and find that the intratemporal first-order condition from the neoclassical growth model accounts for the decline in total hours worked during 1998–2009 in Turkey. Hours worked increased in Turkey since 2009 and the model accounts for half of that increase between 2009 and 2011. Our findings suggest that time-varying taxes on consumption and labor play significant roles in explaining the hours worked in Turkey. The model without subsistence consumption provides a better fit with the data after 2003. The presence of government consumption in the utility function does not seem very important.

The Real Exchange Rate and the Structural Transformation(s) of China and the U.S.

From 1989 to 2010, the RMB–dollar real exchange rate depreciated, despite Chinas rapid income growth relative to the US. We develop a macroeconomic-trade model of the very long-run equilibrium RMB-dollar real exchange rate. We show that this long-run depreciation of the RMB-dollar real exchange rate can be justified by our model, if we note that Chinese agriculture has relatively low productivity and that agriculture is tradeable. Relative to our equilibrium benchmark, the current real RMB-dollar rate is, if anything, over appreciated.

Did the Rising Importance of Services Decelerate Overall Productivity Improvement of Turkey during 2002-2007?

This paper answers the question of what would have been the growth rate of aggregate productivity in Turkey between 2002 and 2007, had it realized China’s rates of productivity growth in agriculture, industry, and services. It does this in a three-sector general equilibrium model calibrated to the Turkish economy over the 2002–2007 period. The main findings are: (i) Turkey would have had much higher aggregate productivity growth over this period if it had experienced China’s service sector productivity growth; (ii) very low productivity growth rates in finance and in the non-market service sector are the main culprits behind Turkey’s weak service-sector performance.

Sectoral sources of sub-Saharan Africa’s convergence

ABSTRACT From 1970 to 2010, sub-Saharan African’s (SSA) labour productivity hovered at around 6% of the US level. This lacklustre performance, which remained stubbornly low despite the SSA’s growth spurt that started in the mid-1990s, masks a great deal of variations across sectors and countries. Using a structural decomposition, we examine, for a representative sample of SSA countries, the sectoral sources that hold back their convergence to the US frontier. Our results suggest the presence of strong – and possibly long-lasting – headwinds that have wiped out the favourable effects of substantial, yet circumstantial, tailwinds. Headwinds, quantified by the unfavourable within- and reallocation-effects, are indicative of significant capital-deepening and technology gaps, both of which are extremely hard to bridge. The tailwinds, represented by favourable between-effects, result from the convergence of the SSA labour force to sectors where some US sectors have seen a slowdown of their productivity relative to that of the whole economy – a development unrelated to the fundamentals underlying the SSA economy. Although few exceptions emerged out of this general pattern, these results are indicative of a bleak outlook for the SSA economic performance at least in the medium run.