The recent episodes of capital flows to emerging market economies in the aftermath of the global financial crisis once again highlighted the importance of appropriate policy design to cope with strong and volatile capital flows, that are effective not only during surges but also during...

This study aims to investigate the e¤ects of government spending shocks on the real exchange rate and foreign trade balance in Turkey for the period of 2002.I - 2012.IV within a structural VAR framework. The analysis shows that a positive shock to government spending tends to induce real...