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Abstract:
A sudden capital outflow may lead to liquidity problems and
hence cause output losses in emerging market
economies. The existence of real effects of such capital
outflows are questioned initially, using
the narrative approach during the past four financial crises in
Turkey during the 1989-1999 period.
The paper also investigates the transmission channels of sudden
capital outflows during 1990's.
In particular, the transmission of the financial crises through
the interest rate, the other asset prices
and credit channels are ventured to identify by a VAR
methodology. The results indicate that the
financial crisis of January 1994 and Russian crisis had real
output effects. The three transmission
channels that we examine, namely the interest rate, credit and
other asset prices channels,
are all found to be effective.
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