Faculty of Business

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Browsing by Institution Author "BAHADIR, Berrak"

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    Catching up or drifting apart: convergence of household and business credit in Europe
    (Elsevier, 2017) Bahadır, Berrak; Valev, N.; Economics; BAHADIR, Berrak
    We provide evidence for convergence in the levels of household and business credit across European countries. The process is particularly strong for the transition countries that have a low initial level of private credit and are catching up with Western Europe. However, the convergence is associated mostly with household credit, including housing loans and consumer credit, which may limit its benefits for economic growth.
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    Credit decomposition and business cycles in emerging market economies
    (Elsevier, 2016) Bahadır, Berrak; Gumus, I.; Economics; BAHADIR, Berrak
    This paper analyzes the differential effects of household and business credit dynamics on business cycles in emerging market economies. We first provide evidence that existing results relating credit expansions to economic expansions, real exchange rate appreciations and trade deficits hold more strongly for household credit than business credit. Then, using a two-sector real business cycle model of a small open economy, we study the model dynamics generated by shocks to household credit and business credit, the latter further divided into credit to tradable and nontradable sectors. The results show that the three types of credit shocks generate different dynamics in sectoral input and output levels as well as the real exchange rate. The model successfully generates the comovement between the cycle and different credit types, matching the strong positive correlation of household credit with output and real exchange rate, and the negative correlation with net exports. Our results underline the importance of distinguishing between household and business credit in studying credit dynamics.
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    Emerging market economies and the world interest rate
    (Elsevier, 2015-11) Bahadır, Berrak; Lastrapes, W. D.; Economics; BAHADIR, Berrak
    We use a Factor Augmented VAR model to estimate the dynamic responses of interest rates in emerging market economies to the ‘world’ interest rate, which we extract from a dynamic factor model of yields in industrialized countries. Our results provide evidence that many emerging market yields respond to world rate shocks, at least gradually, which is broadly consistent with capital market integration. Our findings also suggest that the world rate captures information about emerging market yields not contained in US rates, which are typically used to proxy for the world rate.
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    Financial development convergence
    (Elsevier, 2015-07) Bahadır, Berrak; Valev, N.; Economics; BAHADIR, Berrak
    We show that credit levels relative to GDP and other measures for financial development tend to converge across countries over time. The results are obtained using a broad sample of countries over many years and controlling for the quality of country-level institutions, the efficiency of financial institutions, and a range of macroeconomic variables. While we find evidence for convergence in the broad sample, we show that it levels off when countries reach a medium level of financial development. At high levels of financial development, convergence slows down even more and becomes negligible.
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    Housing market dynamics with delays in the construction sector
    (Elsevier, 2014-12) Bahadır, Berrak; Mykhaylova, O.; Economics; BAHADIR, Berrak
    Housing supply is subject to several types of delays. On average, it takes 6 months to get approved for a residential building permit and another 2–4 quarters to complete a construction project. We present a simple two-sector model that incorporates these observations and show that the effect of these delays is not uniform: while they amplify the response of house prices to demand shocks, they dampen the effects of housing supply shocks. Moreover, construction activity depends on the relative duration of the shocks and the construction delays: delays dampen construction booms following temporary shocks, but exaggerate building activity following permanent changes in demand or supply conditions. Our results highlight the importance of capturing the nature and the persistence of the shocks when studying the effects of construction sector delays on housing market dynamics.
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    The productivity gap: Monetary policy, the subprime boom, and the post-2001 productivity surge
    (Elsevier, 2015-03) Selgin, G.; Beckworth, D.; Bahadır, Berrak; Economics; BAHADIR, Berrak
    It is widely believed that, in the wake of the dot.com crash, the Fed kept the federal funds target rate too low for too long, inadvertently contributing to the subprime boom. We attribute this and other Fed departures from a “neutral” policy stance to the Fed's failure to respond appropriately to exceptional rates of total factor productivity growth. We then show how the Fed, by adhering to a nominal GDP growth rate target, might have succeeded in maintaining such a neutral stance.