On the macroeconomic impact of the August 1999 earthquake in Turkey: a first assessment

Date

2001

Authors

Selcuk, F.
Yeldan, E.

Editor(s)

Advisor

Supervisor

Co-Advisor

Co-Supervisor

Instructor

BUIR Usage Stats
1
views
55
downloads

Citation Stats

Series

Abstract

The devastating earthquake that struck the most densely populated and industrialized area of Turkey on 17 August, 1999 was one of the most damaging natural disasters during this century. This paper is a first attempt to estimate the transition path of the Turkish economy to its new equilibrium after the earthquake. An applied general equilibrium model is utilized to provide an initial assessment and to obtain the second best policy options to mitigate the negative effects of the earthquake. The analytical foundations of the model rest upon intertemporal dynamics as laid out in neoclassical growth theory. Simulation results suggest that the initial impact of the earthquake on GDP may range from -4.5% to +0.8% of GDP, conditional upon policies followed by the government and international donors. The policy implication of the paper is that best outcomes might be reaped via a negative indirect tax (a subsidy financed by foreign aid) to individual sectors to recover their capital losses. On the other hand, an indirect tax to finance the extra fiscal spending would result in an output loss, further deepening the impact of the earthquake on the economy.

Source Title

Applied Economics Letters

Publisher

Routledge

Course

Other identifiers

Book Title

Degree Discipline

Degree Level

Degree Name

Citation

Published Version (Please cite this version)

Language

English