How does the monetary transmission mechanism work? Evidence from Turkey
This paper reveals how monetary transmission works in Turkey under an explicit inflation-targeting regime implemented since the beginning of 2006. We build various vector autoregression (VAR) models and show that the central bank's main policy tool, interest rates, and the nominal exchange rate...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Elsevier
2020-12-01
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| Series: | Borsa Istanbul Review |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2214845020300302 |
| _version_ | 1811252894541807616 |
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| author | Ufuk Can Mehmet Emin Bocuoglu Zeynep Gizem Can |
| author_facet | Ufuk Can Mehmet Emin Bocuoglu Zeynep Gizem Can |
| author_sort | Ufuk Can |
| collection | DOAJ |
| description | This paper reveals how monetary transmission works in Turkey under an explicit inflation-targeting regime implemented since the beginning of 2006. We build various vector autoregression (VAR) models and show that the central bank's main policy tool, interest rates, and the nominal exchange rate are determinant of output and the inflation rate, respectively. Among the external variables selected, the federal funds rate seems to have an impact on Turkish output, while asset prices and liquidity explain majority of the fluctuation in output over time. This study demonstrates that monetary policy is effective in Turkey, an emerging country, and broadens the current literature on monetary transmission in Turkey and other emerging markets. In addition, the paper employs a new approach by exploiting various VAR techniques, including SVAR, to understand and shed light on the functioning of monetary transmission channels in a more comprehensive framework. |
| first_indexed | 2024-04-12T16:41:31Z |
| format | Article |
| id | doaj.art-76ecbdf5a73b4ccd80068206fddb0649 |
| institution | Directory Open Access Journal |
| issn | 2214-8450 |
| language | English |
| last_indexed | 2024-04-12T16:41:31Z |
| publishDate | 2020-12-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Borsa Istanbul Review |
| spelling | doaj.art-76ecbdf5a73b4ccd80068206fddb06492022-12-22T03:24:45ZengElsevierBorsa Istanbul Review2214-84502020-12-01204375382How does the monetary transmission mechanism work? Evidence from TurkeyUfuk Can0Mehmet Emin Bocuoglu1Zeynep Gizem Can2Central Bank of the Republic of Turkey, Cukurova University, INCEIF, Abidinpasa Cad. No:31, 01010, Seyhan/Adana, Turkey; Corresponding author.Central Bank of the Republic of Turkey, CFA, INCEIF, Abidinpasa Cad. No:31, 01010, Seyhan/Adana, TurkeyCukurova University, Abidinpasa Cad. No:31, 01010, Seyhan/Adana, TurkeyThis paper reveals how monetary transmission works in Turkey under an explicit inflation-targeting regime implemented since the beginning of 2006. We build various vector autoregression (VAR) models and show that the central bank's main policy tool, interest rates, and the nominal exchange rate are determinant of output and the inflation rate, respectively. Among the external variables selected, the federal funds rate seems to have an impact on Turkish output, while asset prices and liquidity explain majority of the fluctuation in output over time. This study demonstrates that monetary policy is effective in Turkey, an emerging country, and broadens the current literature on monetary transmission in Turkey and other emerging markets. In addition, the paper employs a new approach by exploiting various VAR techniques, including SVAR, to understand and shed light on the functioning of monetary transmission channels in a more comprehensive framework.http://www.sciencedirect.com/science/article/pii/S2214845020300302C30E40E52E58F41 |
| spellingShingle | Ufuk Can Mehmet Emin Bocuoglu Zeynep Gizem Can How does the monetary transmission mechanism work? Evidence from Turkey Borsa Istanbul Review C30 E40 E52 E58 F41 |
| title | How does the monetary transmission mechanism work? Evidence from Turkey |
| title_full | How does the monetary transmission mechanism work? Evidence from Turkey |
| title_fullStr | How does the monetary transmission mechanism work? Evidence from Turkey |
| title_full_unstemmed | How does the monetary transmission mechanism work? Evidence from Turkey |
| title_short | How does the monetary transmission mechanism work? Evidence from Turkey |
| title_sort | how does the monetary transmission mechanism work evidence from turkey |
| topic | C30 E40 E52 E58 F41 |
| url | http://www.sciencedirect.com/science/article/pii/S2214845020300302 |
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