The Economic Impact of the 15th July Coup D'état in Turkey: A Synthetic Control Approach

Abstract: As military coups have been a relatively common phenomenon both historically and in modern time, their potential impacts have long wanted to be evaluated proficiently. Previous studies have found that the effects seem to be generally negative, but alternative suggestions have also been presented. This paper is based on a study of the military coup attempt that hit Turkey on July 15, 2016, by using the synthetic control method and monthly data on industrial production, harmonized unemployment rate, real effective exchange rate and consumer price index for 21 OECD countries. By exploring the dynamics of the method, and investigating this recent event with high-frequency data, the approach is quite unique in its context. The findings imply that there are arguably visible effects of the coup attempt on the Turkish economy. Though the period observed, January 2015 until January 2017, did not bring any statistically significant results on industrial production, we found that following the military coup attempt in July 2016, the unemployment rate increased by 1 % on average.