M.A. Theses

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Markups, endogenous market power and misallocation in Turkey
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in Social Sciences, 2022., 2022) Karagöz, Korcan.; Çakır, Selcen.
Analyzing firms’ market power and the related aggregate misallocation is one of the intriguing subjects of the macroeconomics research frontier. However, market power and misallocation are mostly treated as exogenous factors, and the literature mostly focus on the effects of the exogenous variation in misallocation on aggregate economic outcomes (Hsieh and Klenow (2009), Restuccia and Rogerson (2008), Fattal Jaef (2018)). Nonetheless, Peters (2020) built up a model with endogenous misallocation where firm’s market power is endogenously determined and via interrelated dynamics of the model, and the equilibrium distribution of markups emerges in the form of a Pareto distribution through which the impact of the market power can be explicitly observed. In this thesis, I will apply the model of Peters (2020) to Turkey, and I will use different samples in terms of the firm size and technology levels. The aim of this study is to reveal if there is any misallocation that is coming from potentially excessive level of market power, and to understand the implications of the market power in the aggregate outcomes. Furthermore, a counterfactual analysis will be done to understand what would happen if the entry barriers in Turkey become weaker, so that the Turkish economy will resemble a more competitive setting. Usually considered an emerging economy, this analysis will be fundamental to understanding the creative destruction related dynamics in Turkey.
Dynamic voluntary contribution under time-inconsistency
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Altınok, Ahmet.; Yılmaz, Murat.
I study the voluntary public good provision model and introduce time inconsistent agents who have {u100000} preferences. There is a public project and finitely many agents where each agent is allowed to contribute any amount in any period before the project is completed. The agents have discontinuous and symmetric preferences over the total contribution with a jump when there is provision. There is complete information about the environment but imperfect information about others’ individual actions: each period, each agent observes only the total contribution made, not the other agents’ individual contributions. Assuming the agents are sophisticated, we characterize the set of equilibria. I compare the set of equilibria under sophisticated time-inconsistent agents to that under time-consistent agents with a discount factor equal to the average discount factor of a time-inconsistent agent. show that there are equilibria with time-inconsistent agents, which are not equilibria with time-consistent agents. We also show that there are some projects, which are completed by the sophisticated time-inconsistent agents earlier than the time-consistent agents complete. iv
Achieving growth through social innovation: a beyond GDP trial. Case studies of Turkey and Russia
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Chiklyaukova, Ekaterina.; Helvacıoğlu, Aslı Deniz.
Beyond GDP approach emphasizes that GDP alone is not comprehensive enough to capture the factors that contribute to the growth in the society. For several years, academicians try to identify the perfect indicator, which describes state of our well-being in the best way. The thesis’ novelty is in its aim of identification of the conceptual relationship between Beyond GDP and social innovation by analyzing the ecosystem of social innovation. There are three major aims defined. The first one is to identify the potential of “beyond GDP” on social innovation. The second one is to propose a novel approach to defining social innovation ecosystem in the light of Social Progress Index, Global Innovation Index and the Legatum Prosperity Index. Volunteering was added to the ecosystem as a unique enabler of social innovation. The development of optimal social innovation ecosystem is to be followed by the specific ones for Turkey and Russia, based on the analysis of respective index indicators scores. The third one is to conduct a case study of social innovation initiatives in Turkey and Russia. Two examples of local foundations that operate with a help of volunteers were examined. At the end of the thesis, policy making recommendations based on the best practices are provided.
The Parisian Regulation Approach: capitalism as a panoply of crisis tendencies
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Güven, Barış.; Madra, Yahya Mete.
In this study, I analyze the Parisian Regulation Approach (PRA) developed as an intellectual response to the structural crisis of capitalism in the late 1960s and early 1970s. In theoretical and relational axes, I examine its ontological, epistemological and methodological assumptions and its relationship to other regulation approaches to grasp the conception of regulation in the PRA. Regime of accumulation, mode of regulation and mode of development are the major concepts produced by the PRA to study the capitalist mode of production and its crises. I analyze them and expose the crisis explanation of the approach. I specifically emphasize the understanding of the PRA of capitalism as a malleable mode of production under the combined effect of the development of forces of production and class struggles with major implications for the formation of its crises. Overaccumulation of capital as a tendency underlay to some degree the crisis formation in the PRA, and David Harvey and Simon Clarke who engaged in the PRA at some point in their intellectual journey formulated it as a general crisis theory. I analyze these later formulations of overaccumulation of capital and develop a critique of these primarily focusing on Harvey from the perspective I distilled from the PRA. It is in this sense that the present study contributes to the critical literature on the crisis theory.
A horse race among models of strategic thinking across similar games
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Emirahmetoğlu, İbrahim.; Gürdal, Mehmet Yiğit.
Human behavior generally deviates from equilibrium in one-shot games. For this reason, a number of strategic thinking models which relax one or more assumptions of equilibrium have emerged. A natural extension to the emergence of these models is to compare their predictive and explanatory powers. In this study we have made a full-fledged comparison of eight prominent models (QRE, Lk, CH, NI, SLk, SCH, GCH and Lm) through a new game and its variations. We have analysed their performances in two ways. First, we out-of-sample predicted experimental results by these models and compared them by calculating the mean of squared distances between predictions and the observed data. Secondly we estimated the models for all games together and compared their log-likelihood values to determine their performance in explaining subjects’ behaviors. We found that models with payoff dependent noise had consistently better predictive performances than those without noisy behavior. Our main contribution is to show that a little modification on game structure might lead to drastically different results in the predictive performances and statistical fits of the models. Even across very similar games, there were significant changes on the performances of the models.
A comparative study of bubble components
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Akyüz, Alp Güven Buğra.; Hatipoğlu Ali Ozan.
The co-movement of prices across the world was highlighted during the Credit Crunch of 2008 and the following periods. Since the price drop is attributed to bursting bubbles, it is of interest whether bubbles also follow a diffusion process across countries. This thesis, calculates the bubble percentages using the Kalman Filter approach and runs Granger causality test in order to determine how bubbles spill over across countries. The results suggest that bubbles indeed spill over and the diffusion process is determined by the development level and economic ties of countries rather than geographical proximity. Moreover, bubbles spill over to emerging markets from developed ones and not the other way around. Whereas, the bubbles spill over across developed economies in a bilateral fashion. iv
Empirical essays on the informal economy
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Başbay, Mustafa Metin.; Torul, Orhan.
In this masters thesis, I empirically study the informal sector in two separate essays, both of which have implications for policy making and make original contributions to the understanding of informality around the world. In the first essay, I investigate the relationship between energy consumption and the size of the informal economy. Relying on panel data regression models, my estimation results show that at the aggregate level, energy intensity is inversely related to the size of the informal sector, providing actual empirical evidence on the presence of high labor and low capital intensity in the informal economy. Furthermore, I also find evidence for the presence of non-linearity and asymmetry in this relationship. In the second essay, I investigate the relationship between the informal sector employment, and micro-level socio-demographic characteristics, political attitudes and individual norms. Using self-reported data, I show that socio-demographic characteristics are strong predictors of the informal sector employment. Moreover, individuals preferences for an economically strong state, as much as their confidence in political institutions are significantly and positively correlated with the informal sector employment, whereas variables associated with confidence in market institutions are negatively correlated with the informal sector employment. I also show that individuals who participate in political processes have a lower probability of working in the informal sector. Finally, I show that individual norms, such as religiosity and tax morale are negatively correlated with the informal sector employment, as well.
Risk sharing rules and investment in groups
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Cangüven, Gökçen.; Gürdal, Mehmet Yiğit.
In this study, we consider a game among n investors, who individually choose to borrow a certain amount to invest in a risky project. We assume that the success probabilities for the risky projects are independent and that the individuals can agree upon a fully enforceable sharing rule. We define four major rules, namely Full Liability (FL), Loss Sharing (LS), Profit Sharing (PS) and Equal Sharing (ES), which differ in terms of the sharing of profits and losses across all investors. We compute the equilibrium investment levels and expected social welfare levels and investigate coalition formation structure under these rules. Our theoretical findings show that the game has a unique dominant strategy Nash equilibrium under each rule. Regarding the total equilibrium investment levels, although the ordering of the rules depends on the parameter values, we show a clear supremacy of ES and LS rules over FL and PS rules. Furthermore, through employing numerical analyses, we demonstrate the dominant structure of ES rule over other sharing rules in terms of individual, utilitarian and egalitarian social welfare levels. Lastly, we find that, with certain constraints on model parameters, two agents with identical risk aversion levels are able to form stable coalitions under each rule.
Statistical arbitrage in crude oil futures market
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Tamkoç, Mehmet Nazım.; Saltoğlu, Burak.
In this study, we use crude oil futures contracts that differ in maturity to come up with a trading algorithm that takes forecasted convenience yields as a base. Because there is a liquidity constraint, we take 5 different futures contracts with a maximum maturity of 5 months from January 1985 to December 2012. By forecasting convenience yields of each contract day by day, we develop a profitable real life simulated trading strategy. The results indicate that there exist statistical arbitrage opportunity in crude oil futures market. After controlling for transaction cost and interest payments, our trading algorithm yields 19.11%, 16.37%, 15.45% and 11.92% annualized returns for the contracts 2-month, 3-month, 4-month and 5-month maturities respectively. In this respect it outperforms alternative trading strategies and generates statistical arbitrage.
Systemic risk and heterogeneous leverage in banking networks: implications for banking regulation
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Sever, Can.; Kuzubaş, Tolga Umut.
In this paper, I study systemic risk implications of balance sheet heterogeneity in a banking network. More speci cally, I analyse systemic impacts of nancial leverage heterogeneity in a banking system under the existence of idiosyncratic shocks. It has been shown that, introducing leverage heterogeneity in the banking system strictly changes systemic risk measures and reveals the signi cance of bank spedicif characteristics. In the calibration, I have used the historical nancial leverage data of the US banking system used in a recent stress testing exercise conducted by the FED. Through experiments, I observe that relative systemic signi cance of the biggest and the most connected borrowers alters depending upon connectivity of network. The evolution of the network, systemic consequences of interbank market size and market segmentation are also analysed in case of idiosyncratic shocks with di erent target banks. This study is also related to the recent BASEL III regulations on systemic risk and the treatment of the Global Systemically Important Banks (GSIB's). This approach can be useful to assess to what extent the recent capital surcharges on GSIB's can be useful to curb the nancial fragility in the banking system. I show that, applying surcharge for the most levered banks reduces the total systemic risk existing in the banking system.
An evaluation of the post-1980 export performance of the Turkish manufacturing industry
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in Social Sciences, 1985., 1985.) Övet, Yonca.; Evcimen, Günar.
Political instability and long run economic growth across the old world
(Thesis (Ph.D.)-Bogazici University. Institute for Graduate Studies in Social Sciences, 2014., 2014.) Kurt, Ezgi.; Karaman, Kamil Kıvanç.
This study investigates determinants of differences in the long run economic development across the Old World. It provides support for the primary role politics played in driving these differences. In particular, the evidence supports the hypothesis that from the tenth century on, the rise of equestrian warfare favored nomadic groups over settled societies in terms of military power. The military dominance of nomads induced political instability in the semi-arid steppes and surrounding regions they inhabited. Political instability, in turn, reduced economic growth. The hypothesis is investigated using a Difference in Difference (DD) empirical strategy with a data set of ninety-one countries from the fifth to the seventeenth centuries. The proxy used for economic growth is population and the main dependent variable, measuring the destabilizing impact of semi-arid steppes, is its distance to each country in the sample. Controlling for various geographical, historical and political variables, econometric results identify a significant and substantial negative impact of being proximate to the steppes on population levels after the tenth century. These findings shed light on one of the key questions in economic history, i.e. the gradual rise of the West, which was protected from the semi-arid steppes at the cost of other economic centers in the Old World, which were not. Rather than a unicausal mechanism, we point out to a complex interaction between geography, military technology and politics in driving the differences.
Two essays on informality
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2014.) Ertürk, Nebahat Ferda.; Elgin, Ceyhun.
The first part of this study intends to give a detailed account on the recent literature of economics of informality. In particular, we focus on effects and determinants of informality as well as measurement of informal activity. We present both theoretical and empirical papers that employ a variety of methods to study informality. In the second part of the paper we ask whether informal economy acts as a barrier to growth of GDP per-capita. This has been a contentious subject in the literature. Cross-country panel regressions for the period between 1960 and 2012 including 160 countries provide evidence for a robust negative relationship between size of informal economy and relative per capita income. Building on this evidence we simulate a simple two-sector (formal and informal) dynamic general equilibrium model and show that under the presence of an informal sector a larger fraction of the observed per capita income differences across countries can be accounted for.
A comparison of stochastic models of natural gas consumption: an application for Turkey
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2014., 2014.) Kiremitçiyan, Serli.; Kuzubaş, Tolga Umut.
In this thesis, we model the dynamic behaviour of natural gas consumption using continuous-time stochastic models to incorporate their significant advantages over the discrete-time models into the modeling process. In addition to offering a wide set of choices for the drift and volatility terms and yielding analytical solutions for any forecast horizon, continuous-time models can also be used in the pricing of contingent claims depending on natural gas consumption since they enable more reliable forecasts at high-frequency levels. Here, we also document that the per consumer natural gas consumption data exhibit stationarity, strong seasonality, mean reversion, and serial correlation. Hence, we study the application of a One-factor mean-reverting process and stochastic Gompertz diffusion model on the modeling of daily natural gas consumption in Istanbul, Turkey that will also incorporate the empirical observations. In the comparison of their forecasting performances which are tested via the backtesting method at different forecast horizons, we find out that the One-factor mean-reverting process is more advantageous than the Gompertz diffusion process. To illustrate the pricing implications of these models, we price two hypothetical contracts and find out that the results vary from one model to another and hence, the choice of model becomes crucial in the real world.
Informality in Turkey: evidence from a firm-level survey
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2014., 2014.) Sezgin, Muhammed Burak.; Elgin, Ceyhun.
In this thesis, we use the results of a novel survey of 500 firms from 13 different sectors in Turkish economy and a two-sector general equilibrium model to measure the extent of informality in these sectors through a sectoral analysis as well as in country level. Afterwards, we evaluate the effects of two different policy tools, namely the level of income taxes and the level of tax enforcement on informality. Our results show that both are effective policy tools in tackling informality, enforcement is a steadily effective tool and the effect of taxation, while positive, shifts around depending on the enforcement level.
Information content of risk reversal in estimating the value at risk of crude oil futures
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2013., 2013.) Erkekoğlu, Fatih.; Saltoğlu, Burak.
This paper attempts to investigate the information content of risk reversal in estimating VaR of oil futures. Using CAViaR PlugIn models, we incorporated risk reversal into CAViaR models. We tested the performance of our model with daily returns of WTI crude oil futures. Our simulation results shows that CAViaR risk reversal PlugIn model significantly improves the performance of standard CAViaR models in terms of out sample hit percentage. We also tested the properties of VaR violation series. Coverage tests results indicate that our newly proposed model not only beats benchmark Riskmetrics and CAViaR models in out sample VaR forecast performance but also produce VaR violation series with properties of true coverage and randomness.
Modeling new monetary policy of the Central Bank of Republic of Turkey
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2014., 2014.) Özvarol, Onur.; Hatipoğlu, Ozan.
Central Bank of Republic of Turkey has started implementing a new monetary policy structure since May 2010. An interest rate corridor has been introduced as the bank's policy instrument. In this study, we evaluate the new policy using several VAR models to test whether Central Bank aims for inflation stabilization. Since interest rate corridor is a unique application firstly implemented by CBRT, no empirical study has been conducted on it yet. Based on Taylor Rule, a variety of reaction functions using policy interest rate, borrowing interest rate (Upper Band) and lending interest rate (Lower Band) are estimated. We also empirically investigate the functionality of gaps between bands and policy rate. Our results imply that Central Bank does not implement inflation targeting regime in the new structure. Instead, the Bank puts financial stability into its target basket and continues to respond developments regarding inflation in selective fashion. We additionally find that upper band responds to internal factors, whereas lower band responds to external factors.
Optimal monetary policy under the presence of informality
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2014., 2014.) Ergene, Salim.; Elgin, Ceyhun.
This thesis studies the optimal monetary policy in an informal sector framework in the presence of nominal price stickiness. We study the optimal policy as a Ramsey plan in which the policy makers maximizes the agent’s welfare subject to equilibrium conditions and the assumed monetary policy rule, nominal interest rate rule. Optimality conditions imply positive rate of inflation in the long run. In the presence of nominal rigidities, we showed that positive rate of inflation facilitates price adjustments and affects the efficiency of the price system. Each firm may reset its price in any given period. The optimal price for a firm depends on mark-up, real marginal cost, money stock and real marginal adjustment cost. Moreover, in each period, a firm observes its technology shock and decides in which sector to produce. In such an environment, we show that there exists a threshold technology level such that firms having a productivity below(above) this level chose to operate in the informal(formal) sector. In this setting, the monetary authority has incentives to use monetary policy to induce firms into the formal sector. The positive rate of inflation might increase the number of firms in the formal sector which leads to higher aggregate activity, but eventually the effect dies out, because positive inflation, at the same time, decreases the labor demand and gives firm an incentive to adjust their prices that is, however, a costly process.
An assessment of new regionalism: the case of Turkey
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2013., 2013.) Türker, Kaner Atakan.; Özar, Şemsa.
This study analyzes the New Regionalism literature, and evaluates the renewed planning agenda which is assigned for sub-national regions in Turkey by making use of the New Regionalism. For that purpose, initially, the history of regional development planning following the establishment of the Republic of Turkey in 1923 is discussed. Later, New Regionalism is examined, starting with an evaluation of its origins. The main concepts of the literature are introduced, and the severe criticisms raised against it are studied in depth. Today, New Regionalism provides the dominant discourse in regional studies, and contributes drastically to the regional planning agendas of international institutions. The European Union, which has a significant impact on Turkey’s political and economic issues, is one of these institutions. Therefore, after the intensified relations with the European Union following the Helsinki Summit, it was inevitable that the literature would penetrate into Turkey’s regional development strategies. This thesis searches for exactly these specific regional development strategies which can be grouped under the diffusion of New Regionalism. To this end, some public plans and documents, which are prepared by the State Planning Organization, Small and Medium Enterprises Development Organization, and Ministry of Industry and Trade in the last decade, are covered. The conclusion reached is that, as they are addressed by a step by step evaluation of these plans, most of them are heavily characterized by the New Regionalism literature. This study paves the way for possible future research which will seek to reformulate Turkey’s New Regionalist policies, by taking account of the criticisms.
Analyzing systemic risk in financial networks using network tools: for the case of financial break down of Turkish money market in 2000
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2013., 2013.) Ömercikoğlu, İnci.; Kuzubaş, Tolga Umut.; Saltoğlu, Burak.
This thesis analyzes performance of several network centrality measures in assesing systemic risk relying on data from the Turkish money market during financial crisis 2000. In order to gain clearer picture of network topology of Turkish money market various network investigation tools such as volume, transactions, links, connectivity and reciprocity are employed. The main borrower role of Demirbank in the collapse of banking system has been studied with several centrality measures. It is shown that those measures can be used as strong signals much before crisis. In an ex-post analysis of crisis, it is shown that centrality measures perform well in detecting systemically important agent, which Demirbank in our case. Network topology of Turkish interbank market satisfies the scale free property which enables us to monitor response to the failure of the central agent. This thesis adds to the new and growing literature on network topological analysis of interbank money markets.

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