A Monetary Disequilibrium Model for Turkey: Investigation of a Disinflationary Fiscal Rule and its Implications for Monetary Policy
In this paper we estimate a monetary disequilibrium model for Turkey based on Khan and Knight's [Khan, M. S., & Knight, M. D. (1981). Stabilization programs in developing countries: a formal framework. IMF Staff Papers, 28, 1-53] framework. Our results show the importance of fiscal discipline in achieving sustainable disinflation. In the long term, however, we conclude that tight fiscal policies should be mixed with monetary and debt management policies to avoid excessive monetary contraction as the real demand for broad money increases with the disinflation process.
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- Mohsin S. Khan & Malcolm D. Knight, 1981. "Stabilization Programs in Developing Countries: A Formal Framework (Programmes de stabilisation dans les pays en dÃ©veloppement: cadre formel) (Programas de estabilizaciÃ³n en los paÃses en desarroll," IMF Staff Papers, Palgrave Macmillan, vol. 28(1), pages 1-53, March.
- Blejer, Mario I & Leiderman, Leonardo, 1981. "A Monetary Approach to the Crawling-Peg System: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 89(1), pages 132-51, February.
- Pierre-Richard AgÃ©nor, 1990. "Stabilization Policies in Developing Countries with a Parallel Market for Foreign Exchange; A Formal Framework," IMF Working Papers 90/16, International Monetary Fund.
- Sassanpour, Cyrus & Sheen, Jeffrey, 1984. "An empirical analysis of the effect of monetary disequilibria in open economies," Journal of Monetary Economics, Elsevier, vol. 13(1), pages 127-163, January.
- Leslie Lipschitz, 1984. "Domestic Credit and Exchange Rates in Developing Countries: Some Policy Experiments with Korean Data (CrÃ©dit intÃ©rieur et taux de change dans les pays en dÃ©veloppement: quelques expÃ©riences en mat," IMF Staff Papers, Palgrave Macmillan, vol. 31(4), pages 595-635, December.
- Sundararajan, V., 1986. "Exchange rate versus credit policy : Analysis with a monetary model of trade and inflation in India," Journal of Development Economics, Elsevier, vol. 20(1), pages 75-105.
- Metin, Kivilcim, 1998. "The Relationship between Inflation and the Budget Deficit in Turkey," Journal of Business & Economic Statistics, American Statistical Association, vol. 16(4), pages 412-22, October.
- Ayca Tekin-Koru & Erdal Ozmen, 2003. "Budget deficits, money growth and inflation: the Turkish evidence," Applied Economics, Taylor & Francis Journals, vol. 35(5), pages 591-596.
- Erdal Ozmen, 1998. "Is currency seigniorage exogenous for inflation tax in Turkey?," Applied Economics, Taylor & Francis Journals, vol. 30(4), pages 545-552.
- Ozatay, Fatih, 1997. "Sustainability of fiscal deficits, monetary policy, and inflation stabilization: The case of Turkey," Journal of Policy Modeling, Elsevier, vol. 19(6), pages 661-681, December.
- Ozatay, Fatih, 2000. "A quarterly macroeconometric model for a highly inflationary and indebted country: Turkey," Economic Modelling, Elsevier, vol. 17(1), pages 1-11, January.
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