Department of Economics

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  • ItemOpen Access
    Good luck or good policy? A recent macroeconomic history of New Zealand
    (World Scientific Publishing Co. Pte. Ltd., 2022-06-29) Akbal, Ömer Faruk; Akbal, Ömer Faruk
    The Great Moderation was a global phenomenon marked by stable economic growth and inflation. However, how much monetary policy contributed to its success remained a popular debate in the literature. Answering this question became imperative after the global financial crisis since global conditions became relatively more important than past. I examined the recent macroeconomic history of New Zealand through the lens of a regime-switching structural vector-autoregression model to understand the contributions of domestic monetary policy and global conditions to its macroeconomic stabilization. A small open economy structure is essential to facilitate the identification of structural shocks that spillover from the globe.
  • ItemOpen Access
    Stock market's assessment of monetary policy transmission: The cash flow effect
    (John Wiley & Sons, Ltd, 2022-05-30) Gürkaynak, Refet; Karasoy-Can, Hatice Gökçe; Lee, Sang Seok; Gürkaynak, Refet; Lee, Sang Seok
    We show that firm liability structure and associated cash flows matter for firm behavior and that financial market participants price stocks accordingly. Stock price reactions to monetary policy announcements depend on the type and maturity of debt issued by the firms and the forward guidance provided by the Fed, both at and away from the zero lower bound. Further, the marginal stock market participant knows the current liability structures of firms and does not rely on rules of thumb. The cash flow exposure at the time of monetary policy actions predicts future investment, assets, and net worth, clearly violating the Modigliani-Miller theorem.
  • ItemOpen Access
    Equilibrium in a civilized jungle
    (Society for Economic Theory, 2022-07) Rubinstein, Ariel; Yıldız, Kemal; Yıldız, Kemal
    The jungle model with an equal number of agents and objects is enriched by adding a language, which is a set of orderings over the set of agents. An assignment of an agent to an object is justified within a group of agents if there is an ordering according to which that agent is the best suited in the group. A civilized equilibrium is an assignment such that every agent is the strongest in the group of agents consisting of himself and those who wish to be assigned to the object and can be justified within this group. We present (i) conditions under which the equilibrium in a civilized jungle is identical to the jungle equilibrium, (ii) a connection between the power relation and the language that is essentially necessary and sufficient for the existence of a Pareto efficient civilized equilibrium, and (iii) an analogue to the second welfare theorem. Copyright © 2022 The Authors.
  • ItemOpen Access
    Endogenous game choice and giving behavior in distribution games
    (MDPI, 2022-11-03) Karagözoğlu, Emin; Tosun, Elif; Karagözoğlu, Emin
    We experimentally investigated the effects of the possibility of taking in the dictator game and the choices of passive players between the dictator game and the taking game on the distribution decisions of active players. Our main findings support our hypothesis: when the dictator game is not exogenously given but chosen by the receivers (or passive players), this makes them accountable, which leads to less giving by dictators. We also conducted an online survey to gain further insights about our experimental results. Survey participants predicted most of the observed behavior in the experiment and explained the factors that might have driven the predicted behavior using reasoning similar to ours. Our results provide a new perspective for the dependence of giving in the dictator game on contextual factors. © 2022 by the authors.
  • ItemOpen Access
    Fiscal decentralization, political heterogeneity and welfare
    (University of Economics - Prague, 2022) Aslim, Erkmen Giray; Neyapti, Bilin; Neyapti, Bilin
    This paper contributes to the literature on fiscal decentralization by presenting a formal model of the interaction between the central and local governments (CG and LGs, respectively) where LGs may differ in their degree of political alignment with CG. The non-cooperative optimal behaviour of the agents reveals that optimal tax increases with the extent of fiscal decentralization (FD), political unison and spillovers across localities, while LGs’ optimal tax collection effort is negatively associated with all of these parameters. The first novel finding of our study is that both welfare peaks and income distribution are more equitable at a lower level of FD in the case of spillovers than in the case of no spillovers, which supports the decentralization theorem. The second novel finding is that both the amount of redistributable income and central government utility increase with the degree of political unison. © 2022, University of Economics - Prague. All rights reserved.
  • ItemOpen Access
    The Political and Economic History of North Cyprus: A Discordant Polity
    (Siyaset Ekonomi ve Toplum Arastirmalari Vakfi, 2022) İsmail, Yazıcı; İsmail, Yazıcı
    According to the author, public employment has evolved into a heavy financial burden on the government as a consequence of the clientelist policies of the post-1974 era. Ekici points out that past governments used the money that had accumulated in the Social Insurance Fund and Provident Fund for clientelist purposes, including giving credit to semi-controlled state enterprises, while the state failed to pay its required contributions to the social security system. In the financial sector, the Central Bank lacks institutional independence due to direct appointments from Turkey, while the Development Bank, which was supposed to foster the growth of the private sector, fell into the hands of clientelistic and rent-seeking politicians.
  • ItemOpen Access
    Hit or miss? Test taking behavior in multiple choice exams
    (Groupe des Ecoles Nationales d'Economie et Statistique (GENES), 2022-09) Akyol, Pelin; Akyol, Pelin
    This paper is the first to structurally model how a test taker answers questions in a multiple choice exam. We allow for the possibility of a penalty for a wrong answer which makes risk averse examinees more likely to skip questions. Despite the lack of item response data, we can estimate the model by using the insight that skipping behavior, together with penalties for wrong answers, makes certain scores much more likely than others. Using data from the Turkish University Entrance Exam, we estimate the model and find that candidates’ attitudes towards risk differ according to their gender and ability with females and those with high ability being significantly more risk-averse. However, the impact of differences in risk aversion on scores is small. As a result, a higher guessing penalty increases the precision of the exam, and does so with a minimal impact on gender bias.
  • ItemOpen Access
    Syrian refugees to Europe: are they different from the non-Syrians?
    (Taylor & Francis, 2022-11-07) Karcı, R.; Doğan, N.; Berument, Hakan; Berument, Hakan
    The conflict and violence in the Syrian Arab Republic have led to an increase in Syrians seeking asylum in European countries. In this study, asylum applications of Syrian refugees to European countries are examined, taking into account the geographical neighborhood effects, with annual data for the time period from 2009 to 2018. This paper also aims to compare asylum applications of Syrian to non-Syrian refugees. The estimation results suggest that positive previous asylum application decisions by the corresponding countries have explanatory power on asylum applications of Syrian and non-Syrian refugees. Economic conditions impact on asylum applications of non-Syrian refugees, while similar statistical evidence cannot be found for Syrian refugees. The empirical evidence from Syrian refugees also indicates a positive geographical neighborhood effect, which suggests that the relationship is stronger in countries that are closer to each other. However, the findings from non-Syrian refugees do not indicate that neighboring observations affect one another. Overall, this suggests that Syrian refugees do not move according to economic incentives but with previous asylum applications that resulted in positive and asylum applications in neighboring countries.
  • ItemOpen Access
    Every choice function is pro-con rationalizable
    (Institute for Operations Research and the Management Sciences (INFORMS), 2022-06-22) Doğan, Serhat; Yıldız, Kemal; Doğan, Serhat; Yıldız, Kemal
    We consider an agent who is endowed with two sets of orderings: pro- and con-orderings. For each choice set, if an alternative is the top-ranked by a pro-ordering (con-ordering), then this is a pro (con) for choosing that alternative. The alternative with more pros than cons is chosen from each choice set. Each ordering may have a weight reflecting its salience. In this case, the probability that an alternative is chosen equals the difference between the total weights of its pros and cons. We show that every nuance of the rich human choice behavior can be captured via this structured model. Our technique requires a generalization of the Ford-Fulkerson theorem, which may be of independent interest. As an application of our results, we show that every choice rule is plurality-rationalizable.
  • ItemOpen Access
    Choice with affirmative action
    (Institute for Operations Research and the Management Sciences (INFORMS), 2022-02-09) Doğan, B.; Yıldız, Kemal; Yıldız, Kemal
    A choice rule with affirmative action decides on the recipients of a limited number of identical objects by reconciling two objectives: respecting a priority ordering over the applicants and supporting a minority group. We extend the standard formulation of a choice problem by incorporating a type function and a priority ordering, and introduce monotonicity axioms on how a choice rule should respond to variations in these parameters. We show that monotonic and substitutable affirmative action rules are the ones that admit a bounded reserve representation. As a prominent class of choice rules that satisfy the monotonicity axioms, we characterize lexicographic affirmative action rules that are prevalent both in the literature and in practice. Our axiomatic approach provides a novel way to think about reserve systems and uncovers choice rules that go beyond lexicographic affirmative action rules.
  • ItemOpen Access
    International trade and letters of credit: A double-edged sword in times of crises
    (Palgrave Macmillan Ltd., 2022-01-05) Crozet, Matthieu; Demir, Banu; Javorcik, Beata; Demir, Banu
    This study argues that the ability to mitigate risks associated with international trade is particularly important at times of heightened uncertainty, such as the economic crisis caused by the Covid-19 pandemic. Risk mitigation can be achieved through letters of credit (LCs), trade finance instruments providing guarantees to trading partners. As their use varies across products, exports of some products are more resilient than others during times of increased uncertainty. This situation reverses in times of financial crises when distressed banks may limit the supply of LCs. Our analysis using data on US and EU-15 exports during the Covid crisis and the Global Financial Crisis provides empirical support for these hypotheses. © 2021, International Monetary Fund.
  • ItemOpen Access
    Compulsory schooling reform and intimate partner violence in Turkey
    (Elsevier, 2022-11) Akyol, Pelin; Kırdar, M. G.; Akyol, Pelin
    We examine how Turkey's 1997 compulsory schooling policy affects intimate partner violence (IPV) using the 2008 and 2014 Turkish National Survey of Domestic Violence Against Women and regression discontinuity design. We find conclusive evidence that the policy reduces physical violence against rural women, whereas this evidence is suggestive for the sample of all women. For the urban sample, we reveal large negative, but statistically insignificant, effects on sexual violence and partners preventing women from working. We find null policy effects on psychological violence for the sample of all women. The policy appears to have been protective against IPV for women overall. In addition, we show that the policy effects are realized through changing partner characteristics as well as women's increased schooling. Our results contradict previous evidence for Turkey, and we demonstrate that the previous evidence misclassifies two key variables.
  • ItemOpen Access
    Daron Acemoglu and James A. Robinson: The narrow corridor: states, societies, and the fate of liberty
    (Taylor & Francis Inc., 2022-03-25) Neyapti, Bilin; Neyapti, Bilin
  • ItemOpen Access
    The switching behavior of large-scale electricity consumers in The Turkish electricity retail market
    (Elsevier, 2022-01) Erdogan, M. R.; Camgoz, S. M.; Karan, M. B.; Berument, M. Hakan; Berument, M. Hakan
    This paper studies the effects of various economic and psychological factors on the switching behavior of large-scale electricity consumers in Turkey. Switching frequency and switching direction are two variables used to analyze switching behavior. The former is concerned with how often retailers change their suppliers. On the other hand, switching direction measures the direction of switching preferences of consumers between two electricity suppliers since the incumbent has a brand advantage over new suppliers that creates inertia and may reduce competition in the market. The target group of this study is large-scale electricity consumers rather than residential consumers since the switching activities of large-scale consumers are more competitive. We employ a five-point Likert scale questionnaire to construct eight psychological and economic factors to explain switching activities. The estimates indicate that improving service quality and providing essential services are the main motivations for switching decisions. Satisfaction with primary services, the homogeneity of the retail electricity market, and switching costs enhance the status quo; however, clarity of contracts and assistance for electricity distribution services (maintenance, metering, billing, etc.) affect the switching activities.
  • ItemOpen Access
    The role of religion in female labor supply: Evidence from two Muslim denominations
    (Cambridge University Press, 2022) Akyol, Pelin; Ökten, Çaǧla; Akyol, Pelin; Ökten, Çaǧla
    This paper investigates the association between religion and female labor market outcomes using new micro-level data on two distinct Muslim denominations in Turkey: Sunni and Alevi Muslims. We find a positive and significant association between being an Alevi Muslim and female labor force participation and employment, whereas there are no significant differences in male labor market outcomes between the two denominations. We provide evidence that Alevi Muslims have more gender-equal views regarding the role of women in the labor market and consider themselves as more modern. Both Sunnis and Alevis consider themselves as believers in religion (Islam). However, Sunnis are more likely to abide by the rules of religion. We argue that differences in views on gender roles and self-identity regarding modernity between the two denominations drive the results on female labor market outcomes. © Université catholique de Louvain 2022.
  • ItemOpen Access
    Education and voluntary work: Evidence from Turkish time use survey
    (Springer, 2022-06) Akar, B.; Akyol, Pelin; Okten, Çağla; Akyol, Pelin; Okten, Çağla
    We use the extension of compulsory education from five to eight years in Turkey as an instrument for educational attainment to investigate the causal effects of education on voluntary work by utilizing Turkish Time Use Survey data. Existing studies use ordinary least squares regressions and establish a positive and significant association; however, such correlation may be induced by the endogeneity problems such as omitted variable bias and reverse causality. In line with the previous studies, our OLS results also show that there is a positive association between schooling and men’s voluntary work. However, when we use the education reform as an instrument for education, a different picture emerges. The exogenous education reform increased the education levels of individuals significantly. Using the education reform as an instrument for education level, we find that increased education of compliers has a negative but insignificant causal impact on the probability and hours of voluntary work for men. Our results suggest that omitted individual factors such as ability and intelligence, and unobservable family characteristics such as values and social norms are likely to have played a role in the positive association of education with voluntary work found in OLS studies. © 2022, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.
  • ItemOpen Access
    A direct proof of the Gale–Nikaido–Debreu lemma using Sperner’s lemma
    (Springer, 2022-09) Le, T.; Le Van, C.; Pham, N.-S.; Sağlam, Çağrı; Sağlam, Çağrı
    The Gale–Nikaido–Debreu lemma plays an important role in establishing the existence of competitive equilibrium. In this paper, we use Sperner’s lemma and basic elements of topology to prove the Gale–Nikaido–Debreu lemma.
  • ItemOpen Access
    The efects of two benchmarks on Russian crude oil prices
    (Springer, 2022-10-05) Şahin, G.; Doğan, N.; Berüment, M. Hakan; Berüment, M. Hakan
    This study analyzes the asymmetric effects of the price shocks of two global crude oil benchmarks (Dated Brent and Dubai) on three Russian crude oil prices: Urals, ESPO, and Sokol. The empirical evidence suggests that an increase in benchmark oil prices causes a rise in the selling prices of these Russian crude oil grades, and a drop in benchmarks decreases the prices. Russia has higher market power in North West Europe and the Mediterranean regions, while there is a more competitive market for Russian oils in Asia. Parallel to this, it is estimated that positive benchmark price shocks impact Urals crude oil grade sales prices more than negative ones in the North West Europe and Mediterranean markets. In contrast, negative benchmark price shocks impact ESPO and Sokol crude oil grade sales prices more than positive ones in the Asian markets. Russia’s main aim is to secure its oil revenues; hence, Russia can secure higher revenue by increasing oil prices more in a less competitive market than in a more competitive market. Additionally, the degree of asymmetry increases as the shock size rises. © 2022, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.
  • ItemOpen Access
    The effect of parental job loss on youth transition to employment in Turkey
    (Wiley-Blackwell Publishing Ltd., 2022-01-20) Karaoğlan, Deniz; Ökten, Çağla; Ökten, Çağla
    This article analyses the impact of household head's involuntary job loss on young person's (15–24 years old) likelihood to transition from non-employment to employment. We construct twelve two-year pseudo-panels based on previous year's labour market outcomes using Turkish Household Labor Force Surveys (THLFS) from 2005 to 2016 and then pool the twelve pseudo-panels for analysis. We examine youth's labour market responses according to education levels and gender. We show that a female with at least a high school degree is about 8.7 percentage points more likely to transition to from non-employment to employment in the group where the head experienced an unexpected job loss than a female in the group where the head remained employed. Furthermore, for females, the probability of transitioning to employment increases by education level. For males, although we find positive and statistically significant effect of head's job loss on the transition probability, we do not find any differences according to education level.
  • ItemOpen Access
    Limit theorems for recursive delegation equilibria
    (Springer, 2022-12) Koray, Semih; Sertel, M.; Koray, Semih
    Delegation games are studied in the context of a symmetric linear Cournotic duopoly where redelegation is permissible. In the absence of extraneous delegation costs, the following results are demonstrated: (1)Each principal has an incentive to redelegate, increasing the length of his delegation chain.(2)As the length of the delegation chain grows beyond bound, (i)total output at the (Cournot) equilibrium on the industry floor converges in monotonically increasing fashion to the socially efficient one, and(ii)the maximand delegated by each primal delegator converges in monotonically decreasing fashion to the (true) profit function. As a consequence it is suggested that in a linear duopoly context socially efficient and truthful outcomes can be arbitrarily closely approximated by the use of Pretend-but-Perform Mechanisms of order sufficiently large. © 2022, The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature.