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The Demand for Base Money in Turkey : Implications for Inflation and Seigniorage

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  • K. Azim Ozdemir
  • Paul Turner

Abstract

This paper presents estimates of the demand for money function derived from two alternative opportunity cost of holding money for the Turkish economy over the period 1988-2000. The specification of the equilibrium relationship is problematic in that real money balances are integrated of order one while the inflation rate and the depreciation of TL against US dollar are integrated of order zero. However it is possible to show that the logarithm of real money balances is stationary around a segmented linear time trend with a break in 1994. The parameter estimates obtained are used to investigate the inflation level and the extent to which real seigniorage revenues have been exploited within the Turkish economy.
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Suggested Citation

  • K. Azim Ozdemir & Paul Turner, 2004. "The Demand for Base Money in Turkey : Implications for Inflation and Seigniorage," Working Papers 0412, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:0412
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2004/04-12
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    References listed on IDEAS

    as
    1. Celasun, Oya, 1998. "The 1994 currency crisis in Turkey," Policy Research Working Paper Series 1913, The World Bank.
    2. Erdal Ozmen, 1998. "Is currency seigniorage exogenous for inflation tax in Turkey?," Applied Economics, Taylor & Francis Journals, vol. 30(4), pages 545-552.
    3. Fatih Özatay, 2000. "The 1994 currency crisis in Turkey," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 3(4), pages 327-352.
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    Cited by:

    1. Aytac, Ozlem, 2015. "A model of a heterodox exchange rate based stabilization," Economic Modelling, Elsevier, vol. 46(C), pages 100-117.
    2. Ozlem Aytac, 2008. "A Model of Exchange-Rate-Based Stabilization for Turkey," Caepr Working Papers 2008-001, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
    3. Akhand Akhtar Hossain, 2015. "Central Banking and Monetary Policy in Muslim-Majority Countries," Books, Edward Elgar Publishing, number 14612.

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    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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