ABSTRACT
On two occasions, first in November 2000 and then in February 2001, foreign and domestic investors pulled out enormous sums of money from the Turkish market within a matter of days. This rush to withdraw funds came about a year after Turkey introduced a disinflation program predicated on an exchange ratebased stabilization (ERJBS), which was designed and supported by the International Monetary Fund (IMF). The Turkish government weathered the crisis in November with the financial support of the IMF and was able to hold on to the exchange rate peg. Three months later, however, turmoil in the market forced the government to abandon the peg. In the months that followed, the currency collapsed, bankruptcies became widespread, unemployment soared, and Turkey faced the worst economic contraction it had seen in decades.
