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Investigation the Effectiveness of the Stock Prices Channel in Turkey: An Analysis for the Period of 2006-2022

Author

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  • Nigar ALEV

Abstract

The dominant goal of monetary policy is price stability, but low unemployment and sustainable economic growth are often also important goals. Central banks mostly consider monetary transmission mechanism tools in the effective implementation of monetary policies. Particularly, the fluctuations in asset prices in recent years necessitated this study. The functioning of the stock channel within the asset price channel has been investigated for the Turkish economy with the VECM method for the period 2006Q1-2022Q2. According to the results of VECM analysis, a negative long-term relationship was determined between interest rates and money supply, investments and industrial production index. On the other hand, a positive long-term relationship was found between the stock variable and money supply and investments, and a negative long-term relationship was found between the industrial production index. As a result of the Granger causality, variance decomposition and action-reaction methods applied after determining the long-term relationship between the variables, it was concluded that the stock channel was partially effective on the real economy.

Suggested Citation

  • Nigar ALEV, 2025. "Investigation the Effectiveness of the Stock Prices Channel in Turkey: An Analysis for the Period of 2006-2022," Fiscaoeconomia, Tubitak Ulakbim JournalPark (Dergipark), issue 1.
    • Handle: RePEc:fis:journl:250106
    DOI: 10.25295/fsecon.1459174
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    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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