The potential impact of a currency crisis for Turkey and its impact on its sovereign bond yield and (Turkey’s – US) sovereign bond yield spread.

Abstract

Though currency and debt crises quite often occur simultaneously, the links between these two types of crises are not well understood. In this research study, we review how monetary policy, debt structure and trade outcomes in Turkey affects the Turkey’s 5-year sovereign bond yield and the (Turkey’s – US) sovereign bond yield spread among the quarterly period 2005 – 2020. In addition, we examine and indicate the strongest relationships between the monetary policy, debt, and trade outcomes during the examined period.