Does Time Inconsistency Problem Apply For Turkish Monetary Policy?
AbstractWe analyze the implications of the time inconsistency problem for the Turkish monetary policy in the last two decades. After deriving the restrictions that the Barro and Gordon model imposes on a time series model for inflation and output, we show that the time inconsistency problem can explain both the short-run and the long-run behaviour of inflation and output in the Turkish economy. The results also reveal that the Turkish monetary policymakers have put more emphasis on output stability than price stability in the last decade.
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Bibliographic InfoPaper provided by Turkish Economic Association in its series Working Papers with number 2005/2.
Length: 32 pages
Date of creation: 2005
Date of revision:
Inflation; Turkish Economy; Time Inconsistency; Kalman Filter;
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
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