This study explores the role of Twitter-based sentiment in shaping inflation expectations within Türkiye's Hybrid New Keynesian Phillips Curve (HNKPC) in a closed-economy framework. By incorporating a novel Twitter-based inflation expectations variable (TWT), derived using Natural Language Processing (NLP) with the Bidirectional Encoder Representations from Transformers (BERT) model, as a forward-looking component, this research offers an alternative to traditional methods like rational expectations and survey data. The findings reveal that while backward-looking inflation (past inflation) remains the dominant driver of expectations, Twitter sentiment, representing forward-looking expectations, influences actual inflation, though with a relatively weaker effect. This suggests that while past inflation plays a crucial role, TWT offers useful, up-to-date observations of the public's views on future inflation. The study also shows that in this closed model, the output gap is not significant, reinforcing the notion that inflation persistence remains central to Türkiye's inflation dynamics. The results suggest that policymakers should consider integrating Twitter sentiment into their strategies to enable more effective and dynamic communication with the public. By better understanding and responding to inflation expectations across traditional and social media, especially Twitter, authorities can enhance the credibility of inflation-targeting frameworks and potentially reduce inflation more efficiently.
The release of the International Monetary Fund's (IMF) Coordinated Direct Investment Survey (CDIS) data accelerated research in a notable area within the FDI network literature: global FDI network research. This sparked research on the characteristics of the global FDI network graph, the country characteristics that determine their position in the graph, and the economic and environmental consequences of a country's global FDI network position. However, these studies did not examine the impact of a country's FDI network position on innovativeness. Adopting network theory, this study examines how countries' positions in the global FDI network graph affect their innovation performance. We apply social network analysis to generate the network graphs. Then, we use a panel data estimation to test the hypotheses. The IMF CDIS data are used to create the network graph. The data cover a 10-year period from 2009 to 2018. Global FDI networks exhibit a power-law distribution or core-periphery structure. As expected, the developed countries have a central position in global FDI networks. The network density increased by 40% since 2009. Having more ties in a global FDI network positively affects a country's innovation performance. However, this influence diminishes as the degree centrality increases. A country's closeness centrality has U-shaped relationship with its innovation performance, whereas betweenness centrality has not statistically significant effect.
Export performance depends not only on current economic conditions but also on firms' expectations about future market developments. This study examines the asymmetric effects of export expectations and exchange rate dynamics on Türkiye's export performance. Using quarterly data for 2011Q1–2023Q3, we estimate a Nonlinear Autoregressive Distributed Lag (NARDL) model that decomposes export expectations and the real effective exchange rate into positive and negative changes, while controlling for exchange rate volatility. A key contribution of the study is the use of the Export Expectation Index derived from the quarterly Foreign Trade Expectation Survey conducted by the Ministry of Trade of the Republic of Türkiye. The survey covers a large and stable sample of firms that account for a substantial share of Türkiye's foreign trade. The Export Expectation Index summarizes their forward-looking assessments, with responses weighted by each firm's share in exports. The results of the analysis reveal clear asymmetries. Negative shocks to export expectations are followed by significantly higher export growth in subsequent periods, consistent with exporters postponing export activity under adverse expectations and expanding exports when conditions improve, while positive shocks have no significant effect. Real exchange rate appreciation significantly reduces exports, while depreciation does not generate comparable gains, consistent with the high import dependence of Turkish exports. Exchange rate volatility has only a weak negative effect. In the short run, export growth is driven mainly by external demand from the European Union, although negative expectation shocks remain significant. The findings are robust across alternative specifications and point to asymmetric adjustment under uncertainty. By jointly analyzing forward-looking firm expectations, exchange rate movements, and volatility, the study contributes new evidence on export behavior in emerging markets.
Persistent fiscal risks in advanced economies highlight the need for comprehensive tools to assess fiscal sustainability. We develop a multidimensional Fiscal Sustainability Index (FSI) comprising nine key fiscal and macroeconomic indicators, including government expenditure, external debt, government revenue, and real GDP growth rate, to evaluate fiscal sustainability across 37 OECD countries from 1995 to 2023. Using principal components analysis, the FSI captures the complex, dynamic interactions among fiscal flows, debt accumulation, and growth performance, offering a more comprehensive and timely assessment than conventional single-ratio indicators. Our results reveal substantial fiscal deterioration during the Global Financial Crisis and even greater vulnerabilities during the COVID-19 pandemic, especially in economies with high external debt. The FSI's multidimensional framework also captures feedback mechanisms and evolving fiscal pressures, enabling policymakers to monitor fiscal resilience effectively and formulate responsive macroeconomic policies amid global shocks. This study advances fiscal surveillance by highlighting the multifaceted nature of fiscal sustainability and providing insights to support adaptive fiscal strategies in advanced economies.
Central banks must closely monitor household debt because it shapes aggregate spending behaviour and influences how households respond to economic shocks. The macroeconomic effects of such shocks depend not only on the overall level of household indebtedness, but also on the interest-rate sensitivity and maturity structure of household liabilities. High debt exposure can amplify changes in consumption, especially when borrowing costs rise or income conditions weaken. Against this background, this study examines the effect of monetary policy on household debt in the United States using quarterly data from 2005Q1 to 2025Q1. Furthermore, given the nonlinear nature of the variables, we use nonlinear approaches, including wavelet quantile regression (WQR) and wavelet quantile correlation (WQC). The ADF and PP results validate each other, showing evidence of stationarity. The findings reveal that policy interest rate hikes have weak short-run effects but strong, medium- and long-term debt-constraining impacts on highly leveraged households. Conversely, increases in the money supply lead to widespread increases in household debt, particularly for the most highly leveraged households, aligning with liquidity-driven credit cycles. Exchange rate depreciation has no immediate effect on household debt but is positively associated with long-term debt accumulation among highly leveraged households, primarily due to imported inflation and liquidity substitution. Consumption expenditure shows a strong positive co-movement with household debt across most debt quantiles and time horizons, whereas capital formation is linked to increased debt only in the long run. Wavelet quantile coherency estimates confirm these trends, highlighting larger and more persistent co-movements between monetary variables and household debt in the medium-to long-term frequencies. Based on the study's findings, recommendations for practical policy decision-making are derived from the broad research results to guide relevant stakeholders and decision-makers in pursuing more effective monetary policy for managing household debts.
