Have Financial Stability Concerns Changed the Priority of the Central Bank of the Republic of Turkey?
This paper aims at analysing whether the Central Bank of the Republic of Turkey (CBRT), designing a new monetary policy framework to achieve financial stability in the last quarter of 2010, tries to pursue financial stability by putting price stability on the back burner. To this end, a forward-look...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Sciendo
2017-08-01
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| Series: | Studies in Business and Economics |
| Subjects: | |
| Online Access: | https://doi.org/10.1515/sbe-2017-0019 |
| _version_ | 1828852348530720768 |
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| author | Erdem Ekrem Bulut Umit Kocak Emrah |
| author_facet | Erdem Ekrem Bulut Umit Kocak Emrah |
| author_sort | Erdem Ekrem |
| collection | DOAJ |
| description | This paper aims at analysing whether the Central Bank of the Republic of Turkey (CBRT), designing a new monetary policy framework to achieve financial stability in the last quarter of 2010, tries to pursue financial stability by putting price stability on the back burner. To this end, a forward-looking reaction function that is extended with nominal exchange rate gap and nominal domestic credits gap is estimated for the CBRT. The paper first performs unit root and cointegration tests and finds that the variables become stationary at first differences and that there is a cointegration relationship among variables. Then, the paper conducts the Kalman filter to obtain time varying parameters. The findings show that the coefficients of all explanatory variables did not change too much after the new monetary policy framework of the CBRT in the last quarter of 2010. Therefore, this paper asserts that the CBRT continues to pursue price stability as its primary goal and tries to achieve financial stability by using macroprudential tools. Thus this paper concludes that financial stability concerns have not changed the priority of the CBRT. |
| first_indexed | 2024-12-12T23:51:26Z |
| format | Article |
| id | doaj.art-72a5492f562b4116b6f2aa96cdec0c86 |
| institution | Directory Open Access Journal |
| issn | 2344-5416 |
| language | English |
| last_indexed | 2024-12-12T23:51:26Z |
| publishDate | 2017-08-01 |
| publisher | Sciendo |
| record_format | Article |
| series | Studies in Business and Economics |
| spelling | doaj.art-72a5492f562b4116b6f2aa96cdec0c862022-12-22T00:06:40ZengSciendoStudies in Business and Economics2344-54162017-08-01122354510.1515/sbe-2017-0019sbe-2017-0019Have Financial Stability Concerns Changed the Priority of the Central Bank of the Republic of Turkey?Erdem Ekrem0Bulut Umit1Kocak Emrah2Erciyes University, Kayseri, TurkeyAhi Evran University, Merkez/Kırşehir, TurkeyAhi Evran University, Merkez/Kırşehir, TurkeyThis paper aims at analysing whether the Central Bank of the Republic of Turkey (CBRT), designing a new monetary policy framework to achieve financial stability in the last quarter of 2010, tries to pursue financial stability by putting price stability on the back burner. To this end, a forward-looking reaction function that is extended with nominal exchange rate gap and nominal domestic credits gap is estimated for the CBRT. The paper first performs unit root and cointegration tests and finds that the variables become stationary at first differences and that there is a cointegration relationship among variables. Then, the paper conducts the Kalman filter to obtain time varying parameters. The findings show that the coefficients of all explanatory variables did not change too much after the new monetary policy framework of the CBRT in the last quarter of 2010. Therefore, this paper asserts that the CBRT continues to pursue price stability as its primary goal and tries to achieve financial stability by using macroprudential tools. Thus this paper concludes that financial stability concerns have not changed the priority of the CBRT.https://doi.org/10.1515/sbe-2017-0019the central bank of the republic of turkeymacroprudential policykalman filtertime varying parameter |
| spellingShingle | Erdem Ekrem Bulut Umit Kocak Emrah Have Financial Stability Concerns Changed the Priority of the Central Bank of the Republic of Turkey? Studies in Business and Economics the central bank of the republic of turkey macroprudential policy kalman filter time varying parameter |
| title | Have Financial Stability Concerns Changed the Priority of the Central Bank of the Republic of Turkey? |
| title_full | Have Financial Stability Concerns Changed the Priority of the Central Bank of the Republic of Turkey? |
| title_fullStr | Have Financial Stability Concerns Changed the Priority of the Central Bank of the Republic of Turkey? |
| title_full_unstemmed | Have Financial Stability Concerns Changed the Priority of the Central Bank of the Republic of Turkey? |
| title_short | Have Financial Stability Concerns Changed the Priority of the Central Bank of the Republic of Turkey? |
| title_sort | have financial stability concerns changed the priority of the central bank of the republic of turkey |
| topic | the central bank of the republic of turkey macroprudential policy kalman filter time varying parameter |
| url | https://doi.org/10.1515/sbe-2017-0019 |
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