IMPACT OF EXCHANGE RATE VOLTALITY ON ECONOMIC GROWTH: EVIDENCE FROM TURKEY CASE

Abstract

A significant macroeconomic aspect that has an impact on both international trade and any nation's economic development is the exchange rate.Gross domestic product (GDP) growth rate is the level of increase that occurs in a country's economic output, and this rate determines exactly how fast a country's economy can grow. Many countries use real GDP to calculate the growth rate. It is very important to study the effect of the exchange rate on the GDP. This thesis looks at the impact of exchange rate fluctuation on Turkey's economic development from 1999 to 2021. We have taken Twenty- three annual observations of two time series data with interval period extend from 1999 to 2021 in Turkey. The Granger causality test and simple regression model were used to examine the causal linkages between foreign exchange rate volatility and economic growth. There is only one conceivable path for the causal relationship between exchange rate volatility and economic growth, and empirical evidence indicates that exchange rate volatility has a negative and statistically significant influence on Turkey's economic growth.