Abstract
Purpose- This work inquires whether there's a correlation between Covid-19 and the net foreign exchange reserve, which shows sensitivity to crises. Methodology- For this purpose, the daily data on COVID-19 seen in Turkey (case taken from Republic of Turkey Ministry of Health, cumulative case and infection rate data from Public Health Experts Association (HASUDER) and daily net foreign exchange reserve data calculated with the data obtained from the Central Bank of Turkey (CBT) balance sheet for the period between 11 March-14 May 2020 were tested applying the ARDL Bounds Test Approach and analyzed within the framework of the Error Correction Model (VECM). And to query short-run relationship, Granger Test over the VECM Model has been applied. Findings- According to the analysis result; There is a cointegration in the long-run between COVID-19 and the net foreign exchange reserve, and is statistically significant. Also, net foreign exchange reserve is a Granger cause for the quantity of cases, the cumulative quantity of cases, and the rate of infection in the short-run. Conclusion- In the process of transformation of a health crisis caused by a pandemic into a global economic crisis, this study contributes to the formation of the literature and is noteworthy with its results. Especially in the short-run, net foreign exchange reserves were determined to be a Granger cause of COVID-19, and therefore it was determined empirically that the change in reserves escalated the pandemic. The study is a contribution to the literature.
Highlights
A new crisis period is being experienced across the world, with a total of 7.633.886 detected cases and 426.317 deaths (WHO) from December 31, 2019, to June 13, 2020
For this purpose, the daily data on COVID-19 seen in Turkey (case taken from Republic of Turkey Ministry of Health, cumulative case and infection rate data from Public Health Experts Association (HASUDER) and daily net foreign exchange reserve data calculated with the data obtained from the Central Bank of Turkey (CBT) balance sheet for the period between 11 March-14 May 2020 were tested applying the ARDL Bounds Test Approach and analyzed within the framework of the Error Correction Model (VECM)
COVID-19, another pandemic faced by human beings, emerged as an important factor triggering a global collapse in the modern world, unlike the previous ones
Summary
A new crisis period is being experienced across the world, with a total of 7.633.886 detected cases and 426.317 deaths (WHO) from December 31, 2019, to June 13, 2020. As of June 13, 2020, 10:00 a.m., the total number of cases in the world has reached 7.625.883 and the total quantity of deaths has reached 425.931 (ECDC) Within this global view, with a total of 172.114 cases (Ministry of Health), Turkey has a total of 2.35% of cases worldwide (Figure 2). It is noteworthy that during the first global financial crisis, many Developing Countries (DC) during 2008: Q4–2009: Q1 period experienced depreciation in their foreign exchange reserves and exchange rates From this point of view, the objective of this study is to investigate whether there is a relationship between the change in net fx reserves of Turkey in the process of pandemic and COVID-19. The section will mention the empirical study conducted and describe and discuss its results
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