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Monetary Policy Rules in Practice : Evidence from Turkey

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  • Hakan Berument
  • Hakan Tasci

Abstract

This paper estimates a forward-looking monetary policy reaction function of the Central Bank of the Republic of Turkey by considering the period from 1990:01 to 2000:10. When the spread between the interbank rate and depreciation rate of the local currency is taken as a policy tool, the empirical evidence suggests that the Turkish Central Bank responds to its foreign exchange reserves, output and M2 growth not the forward, current or lagged inflation. Copyright © 2003 John Wiley & Sons, Ltd.
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Suggested Citation

  • Hakan Berument & Hakan Tasci, 2003. "Monetary Policy Rules in Practice : Evidence from Turkey," Working Papers 0305, Department of Economics, Bilkent University.
    • Handle: RePEc:bil:wpaper:0305
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    References listed on IDEAS

    as
    1. Hakan Berument & Kamuran Malatyali, 2000. "The implicit reaction function of the Central Bank of the Republic of Turkey," Applied Economics Letters, Taylor & Francis Journals, vol. 7(7), pages 425-430.
    2. Bernanke, Ben S & Blinder, Alan S, 1992. "The Federal Funds Rate and the Channels of Monetary Transmission," American Economic Review, American Economic Association, vol. 82(4), pages 901-921, September.
    3. Sims, Christopher A., 1992. "Interpreting the macroeconomic time series facts : The effects of monetary policy," European Economic Review, Elsevier, vol. 36(5), pages 975-1000, June.
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    Cited by:

    1. M. Ege Yazgan & Hakan Yilmazkuday, 2007. "Monetary policy rules in practice: evidence from Turkey and Israel," Applied Financial Economics, Taylor & Francis Journals, vol. 17(1), pages 1-8.
    2. Ozgur ASLAN & H. Levent KORAP, 2007. "Monetary Transmission Mechanism In An Open Economy Framework: The Case Of Turkey," Istanbul University Econometrics and Statistics e-Journal, Department of Econometrics, Faculty of Economics, Istanbul University, vol. 5(1), pages 41-66, May.
    3. Umit Bulut, 2016. "How Far Ahead Does the Central Bank of the Republic of Turkey Look?," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 5(1), pages 99-111.
    4. Prakash Kumar Shrestha, Ph.D., 2016. "Macroeconomic Impact of International Reserves: Empirical Evidence from South Asia," NRB Working Paper 32/2016, Nepal Rastra Bank, Research Department.
    5. Hasanov, Mübariz & Omay, Tolga, 2008. "Monetary policy rules in practice: Re-examining the case of Turkey," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 387(16), pages 4309-4318.
    6. Prakash Kumar Shrestha, Ph.D., 2016. "Macroeconomic Impact of International Reserves: Empirical Evidence from South Asia," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 28(1), pages 1-26, April.
    7. Civcir, Irfan & Akçaglayan, AnIl, 2010. "Inflation targeting and the exchange rate: Does it matter in Turkey?," Journal of Policy Modeling, Elsevier, vol. 32(3), pages 339-354, May.
    8. ERDEM Ekrem & BULUT Umit & KOCAK Emrah, 2017. "Have Financial Stability Concerns Changed The Priority Of The Central Bank Of The Republic Of Turkey?," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 12(2), pages 35-45, August.
    9. Yağcıbaşı Özge Filiz & Yıldırım Mustafa Ozan, 2017. "Welfare Implications of Alternative Monetary Policy Rules: A New Keynesian DSGE Model for Turkey," Review of Economic Perspectives, Sciendo, vol. 17(4), pages 363-379, December.
    10. M. Berument & Selahattin Togay & Afsin Sahin, 2011. "Identifying the Liquidity Effects of Monetary Policy Shocks for a Small Open Economy: Turkey," Open Economies Review, Springer, vol. 22(4), pages 649-667, September.
    11. Prakash Shrestha, 2017. "Macroeconomic Impact of International Reserves: Empirical Evidence from South Asia," Working Papers id:12166, eSocialSciences.
    12. Omay, Tolga Omay & Hasanov, Mubariz, 2006. "Türkiye için reaksiyon fonksiyonunun doğrusal olmayan modelle tahmin edilmesi [A nonlinear estimation of monetary policy reaction function for Turkey]," MPRA Paper 20154, University Library of Munich, Germany.
    13. Nejla Adanur Aklan & Mehmet Nargelecekenler, 2008. "Taylor Rule in Practice: Evidence from Turkey," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 14(2), pages 156-166, May.
    14. Hoda Selim, 2012. "Exploring the Role of the Exchange Rate in Monetary Policy in Egypt," Working Papers 733, Economic Research Forum, revised 2012.
    15. Yilmazkuday, Hakan, 2009. "Inflation Targeting and Inflation Convergence within Turkey," MPRA Paper 16770, University Library of Munich, Germany.
    16. Aleem, Abdul & Lahiani, Amine, 2011. "Monetary policy rules for a developing country: Evidence from Pakistan," Journal of Asian Economics, Elsevier, vol. 22(6), pages 483-494.
    17. repec:kap:iaecre:v:14:y:2008:i:2:p:156-166 is not listed on IDEAS
    18. Ümit BULUT, 2019. "The Monetary Policy Reaction Function in Turkey: Evidence from Fourier-Based Time Series Methods," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 69(2), pages 159-173, December.

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