Sule Ozler

Political Instability and Economic Growth

This paper investigates the relationship between political instability and per capita GDP growth in a sample of 113 countries for the period 1950 through 1982. We define political instability as the propensity of a government collapse, and we estimate a model in which such a measure of political instability and economic growth are jointly determined. The main result of this paper is that in countries and time periods with a high propensity of government collapse, growth is significantly lower than otherwise. We also discuss the effects of different types of government changes on growth.

Black Market Exchange Rates in Turkey

Black markets for foreign exchange have had an uninterrupted existence in Turkey’s history. The nature of the black market, however, showed a dramatic change with the onset of path-breaking, market-oriented economic reforms in the 1980s. From a position of very significant activity before 1980, both the level of activity and the premium on foreign exchange in the black market declined throughout the 1980s, becoming negligible as the Turkish lira gained convertibility in 1989. The importance of the Turkish experience is that a successful unification was achieved without an immediate threat of reversal.