Three Essays on Structural Economic Problems, and Applied Model Construction for Turkey

Murat Aslan

Advisor: Daniel E Houser, PhD, Department of Economics

Truland Building, ICES
July 27, 2004, 08:00 PM to 07:00 PM


This study investigates the structural problems and their historical roots by using both narrative approach and an applied computable general equilibrium model. In the first essay, by using the narrative approach, we outline the current economic problems and the way they are connected with the government policies in the last century. In the second essay, the objective is to explain the details about the way we construct a Social Accounting Matrix (SAM) for Turkey. In order to reconcile the differences in data from various sources, we employ the Cross Entropy Method. In the third essay, we construct an applied general equilibrium model (CGE) based on calibration process by using the SAM we developed in the previous essay. We run several counterfactual experiments to analyze the alternative fiscal policies for Turkish economy. In particular, the counterfactual experiments based on our calibrated model suggests that Turkish economy would have been largely protected from severe economic downturns had there been more disciplined fiscal policy and more credible governments.