Is An Interest-Free Small Open Economy Possible In A Global Economy?

Year 2023, Volume: 8 Issue: 1, 325 - 334, 30.06.2023

Erdal Harunogullari

Abstract

This article examines the feasibility and effects of a small, interest-free open economy. It analyzes the impact of profit-loss-sharing (PLS) scenarios on exchange rates and capital mobility using the uncovered interest parity (UIP) condition. Descriptive analysis and stochastic simulation model were used in the article. The study argues that a small open economy can thrive globally with a compatible PLS system and flexible exchange rates. Findings suggest that an Islamic open economy under flexible exchange rates achieves higher output growth, lower inflation, and improved welfare compared to a traditional open economy. The article provides empirical evidence and policy recommendations, addressing a research gap in understanding the relationship of a small open Islamic economy with the outside world.

Keywords

Islamic Economics and Finance, Profit- Los Sharing, Small Open Islamic Economic Model, Islamic Economic Model

Küresel Ekonomide Faizsiz Bir Küçük Açık Ekonomi Mümkün müdür?

Abstract

Bu makale, küçük, faizsiz bir açık ekonominin fizibilitesini ve etkilerini incelemektedir. Karşılanmamış faiz paritesi (UIP) koşulunu kullanarak kâr-zarar paylaşımı (PLS) senaryolarının döviz kurları ve sermaye hareketliliği üzerindeki etkisini analiz eder. Makalede betimsel analiz ve stokastik simülasyon modeli kullanılmıştır. Çalışma, küçük bir açık ekonominin, uyumlu bir PLS sistemi ve esnek döviz kurları ile küresel olarak gelişebileceğini savunuyor. Bulgular, esnek döviz kurları altındaki İslami bir açık ekonominin, geleneksel bir açık ekonomiye kıyasla daha yüksek çıktı büyümesi, daha düşük enflasyon ve gelişmiş refah elde ettiğini göstermektedir. Makale, küçük bir açık İslam ekonomisinin dış dünya ile ilişkisini anlamadaki bir araştırma boşluğunu ele alarak ampirik kanıtlar ve politika önerileri sunmaktadır.

Keywords

İslam Ekonomisi ve Finansı, Kâr-Zarar Ortaklığı, Küçük Açık İslami Ekonomik Model, İslami Ekonomisi Modeli

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