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Testing Quantity Theory of Money for the Turkish Economy

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  • Özgür Aslan
  • Levent Korap

Abstract

In this paper, it is tried to test the main assumptions of the Quantity Theory of Money for the Turkish economy. Using some contemporaneous estimation techniques to examine the long-run stationary economic relationships on which the quantity theory is constructed, it is found that stationary characteristics of the velocitities of narrowly and broadly defined monetary aggregates cannot be rejected. However, monetary aggregates seem to be endogenous for the long-run evoluation of prices and real income. It is concluded that monetary authorities follow an accommodative monetary policy inside the period given the endogeneity of the monetary variables.

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File URL: http://www.bddk.org.tr/WebSitesi/turkce/Raporlar/BDDK_Dergi/4212Makale-5.pdf
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Bibliographic Info

Article provided by Banking Regulation and Supervision Agency in its journal Journal of Banking and Financial Markets.

Volume (Year): 1 (2007)
Issue (Month): 2 ()
Pages: 93-109

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Handle: RePEc:bdd:journl:v:1:y:2007:i:2:p:93-109

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Keywords: Quantity Theory of Money; Neutrality; Co-integration; Turkish Economy.;

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References

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  1. James Bullard, 1999. "Testing long-run monetary neutrality propositions: lessons from the recent research," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 57-77.
  2. Erdan Ozmen, 2003. "Testing The Quantity Theory of Money in Greece: A Note," ERC Working Papers 0310, ERC - Economic Research Center, Middle East Technical University, revised Oct 2003.
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  18. Koustas, Z., 1996. "Canadian Evidence on Long-Run Neutrality Propositions," Working Papers 1996-04, Brock University, Department of Economics.
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Citations

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Cited by:
  1. Levent, Korap, 2009. "The search for co-integration between money, prices and income: low frequency evidence from the Turkish economy," MPRA Paper 19557, University Library of Munich, Germany.
  2. Alimi, R. Santos, 2012. "The Quantity Theory of Money and Its Long Run Implications: Empirical Evidence from Nigeria," MPRA Paper 49598, University Library of Munich, Germany.

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