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

Authors : Erdal HARUNOGULLARİ

Pages : 325-334

View : 45 | Download : 31

Publication Date : 2023-06-30

Article Type : Research Paper

Abstract :This article examines the feasibility and effects of a small, interest-free open economy. It analyzes the impact of profit-loss-sharing insert ignore into journalissuearticles values(PLS); scenarios on exchange rates and capital mobility using the uncovered interest parity insert ignore into journalissuearticles values(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 : İslam Ekonomisi ve Finansı, Kâr Zarar Ortaklığı, Küçük Açık İslami Ekonomik Model, İslami Ekonomisi Modeli