The effects of capital inflows on Turkish macroeconomic performance

Capital inflows are an important factor affecting macroeconomic performance, such as the real exchange rate, interest rates, output, and price level. However, the components of capital inflows are also important. Capital inflows in the forms of portfolio investment liabilities, foreign direct investment, and other investment liabilities may affect these macroeconomic variables differently. The main focus of this study is to analyse the behaviour of key macroeconomic variables in response to the different components of capital inflow shocks for Turkey using monthly data from January 2000 to December 2012 by utilising a vector autoregression model.