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The Effect Of Monetary Policy Shock On Employment And Output: The Case Of Turkey

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  • BIRGUL CAMBAZOGLU
  • SIMAY KARAALP H.

Abstract

Monetary transmission mechanism which is questioning the relationship between macro economic variables and monetary variables has been discussed from past to present. It is generally accepted that contractionary monetary shocks affect total consumption, employment and total output negatively. However, the leading position of countries’ properties (socio-economic, political etc.) on the relationship between real variables and monetary variables, create a debate among economists and ratify to make them precise evidence. The main aim of this paper is to analyze the effectiveness of narrow credit view on employment and output for Turkey. Within this framework, money supply, total loans, employment rates and industrial production index monthly variables are analyzed for the period of 2005-2010 by using VAR method. The results indicate that changes in money stock (m2) have an impact on real variables such as employment and output through credit stock.

Suggested Citation

  • Birgul Cambazoglu & Simay Karaalp H., 2011. "The Effect Of Monetary Policy Shock On Employment And Output: The Case Of Turkey," Journal of Academic Research in Economics, Spiru Haret University, Faculty of Accounting and Financial Management Constanta, vol. 3(3 (Novemb), pages 543-550.
  • Handle: RePEc:shc:jaresh:v:3:y:2011:i:3:p:543-550
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    Keywords

    Monetary Transmission Mechanism; Employment; Output; Turkey; VAR.;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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