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Turkish Stock Prices and the Value of Turkish Lira

1997; Taylor & Francis; Volume: 18; Issue: 1 Linguagem: Inglês

10.1080/02255189.1997.9669698

2158-9100

Mohsen Bahmani‐Óskooee, Ilker Domaç,

Fiscal Policy and Economic Growth

ABSTRACT It has been argued in the literature that currency depreciation can result in a change in stock prices and vice versa. Previous researchers investigated the relation between stock prices and exchange rates by drawing data from industrial countries. In this paper we consider the experience of a developing nation, i.e., Turkey. Using cointegration technique we are able to show that Turkish stock prices and exchange rates do have a long-run relationship. Application of error-correction modeling reveal that in the short-run stock prices and exchange rates do cause each other.