Browsing by Author "Yeldan, A. Erinc"

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Green Central Banking Under High Inflation-More of a Need Than an Option: an Analytical Exposition for Turkey
(Wiley, 2023) Unuvar, Burcu; Yeldan, Alp Erinç; Yeldan, A. Erinc
Motivation: Calls for a green monetary policy are intensifying as the climate crisis deepens. Although the leading central banks of low-inflation countries are the spokesmodels of this discussion, considerations of green central banking under high inflation continue to lag. The motivation of this article is to contribute to this process with a working example from Turkey-an economy under severe inflationary pressure.Purpose: Our first objective is to document the risks associated with climate change for the Central Bank of the Republic of Turkey (CBRT) in terms of its main mandate of price stability and to provide evidence to pursue green policies. We next examine the feasibility of a green monetary design under high inflation.Methods and approach: We scrutinize the duties and responsibilities of the CBRT as set by law and set out the armoury it would have at its disposal in pursuing a green monetary policy. Exhibiting climate change-related risks to its mandate(s), we find one climate policy-related and two mandate-related reasons for the CBRT to go green, matching them with robust green instruments.Findings: Adopting a green monetary policy has the potential to improve the CBRT's ability to reach its objective of price stability. Indicating that green central banking in a high-inflation country is more of a need than an option, we also document that greening of the monetary policy does not necessarily conflict with the broad mandates of inflation targeting and financial stability.Policy implications: Evidence from Turkey supports the greening of the CBRT. This call is both feasible in terms of its capabilities and critical as regards fulfilling the mandate. Furthermore, by exposing carbon bias in the country's loan portfolio, our findings support aligning monetary policy with emissions-abatement instruments, thus contributing to the overall design of Turkey's climate policies.
Potential Effects of the Eu's Carbon Border Adjustment Mechanism on the Turkish Economy
(Springer, 2022) Acar, Sevil; Yeldan, Alp Erinç; Asici, Ahmet Atil; Yeldan, A. Erinc
In December 2019, the EU announced the European Green Deal (EGD) to create a climate-neutral continent by 2050. Accordingly, the EU Emission Trading System (ETS) will be revised to maintain economic growth against possible losses in competitiveness, leading to carbon leakage. Carbon border adjustment (CBA) is one of the mechanisms proposed to tackle the carbon leakage problem. In this paper, we provide a first-order estimate of the potential impacts of a possible CBA across production sectors and build a dynamic, multi-sectoral applied general equilibrium (AGE) model to study the overall macroeconomic impact of the EGD on the Turkish economy. Then, we extend our analysis to document the potential benefits of a more active climate policy. The model is in the Walrasian tradition wherein aggregate supply and demand actions are simulated with the interplay of relative prices to bring equilibrium in the markets for goods, for labor, and for foreign exchange. Constructed around 24 production sectors, the model accommodates flexible, multi-level functional forms to link production activities with gaseous emissions, a government entity to maintain taxation, and public expenditures, as well as administration of environmental policy instruments, all within an open-economy macroeconomic environment. Our results suggest that the potential adverse impact of the CBA on the Turkish economy would range between 2.7 and 3.6% loss of the GDP by 2030 over the business-as-(un)usual base path. We also document that under an alternative scenario through which Turkey is modeled as an active agent in the international climate policy arena embedding decarbonization into her official macroeconomic policy agenda, she can achieve a superior pathway for national income and a reduced carbon burden.
Turkey in Turbulence: Heterodoxy or a New Chapter in Neoliberal Peripheral Development?
(Wiley, 2023) Orhangazi, Özgür; Yeldan, Alp Erinç
While global monetary tightening by central banks, led by the US Federal Reserve, has heightened concerns about a slowdown in the world's economy and an increased likelihood of debt crises across developing countries, Turkey has attracted attention for doing the opposite. Indeed, the country's economic policy makers have intensified monetary easing towards credit expansion at the risk of increased exchange rate instability. This article analyses the Turkish case and makes four contributions. First, it establishes a framework through which we can understand and interpret the policy choices of the government. Second, it shows the binding effects of the trilemma in the context of an economy fully integrated in the global economy and discusses how the government tried to tackle these effects through a series of ad hoc policy measures. Third, the article discloses the distributional consequences of such policy manoeuvres and argues that the burden of adjustment fell on the shoulders of wage labour, while various competing rentier interests benefited from these policies. Fourth, the authors analyse these policies from a broader perspective of whether they can be interpreted as a courageous attempt by a peripheral developing economy to claim some policy space, or whether these policy choices in essence only amount to a deepening of neoliberal peripheralization.
Turkey: Challenges and Strategies Toward De-Carbonization and Sustainable Development Under the Age of Finance
(Taylor & Francis Ltd, 2023) Yeldan, A. Erinc; Yeldan, Alp Erinç
The aim of this paper is to present the key challenges and structural constraints as well as potential strategies toward de-carbonization and the green transformation in Turkey, and to argue that the current mode of global finance in many ways conspires to constrain Turkey's quest for a sustainable and green industrial policy. I consider Turkey's conundrum against the backdrop of its speculation-led growth patterns and ongoing fossil fuel-based production cycle and highlight the tradeoffs and dilemmas of the pursuit for green abatement policies, given the logic of financialization.