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Financial crisis, monetary policy reform and the monetary transmission mechanism in Turkey

  • James L. Butkiewicz

    ()

    (Department of Economics,University of Delaware)

  • Zeliha Ozdogan

    ()

    (Research and Statistics,SBT ANALYSIS)

Turkey experienced a financial crisis in 2000-2001 that led to significant financial reforms. The reforms resulted in a switch to a floating exchange rate, granted greater central bank independence and pursuit of a more credible monetary policy. Investigation of the channels of monetary policy in both periods finds that monetary policy's output effects have been strengthened considerable by the reforms. In the pre-crisis period monetary policy was highly inflationary, while in the post-crisis period, monetary policy targets low inflation and has become a tool for output stabilization. These results support the importance of central bank independence and a credible policy.

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File URL: http://www.lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2013/UDWP13-08.pdf
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Paper provided by University of Delaware, Department of Economics in its series Working Papers with number 13-08.

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Length: 33 pages
Date of creation: 2013
Publication status: Forthcoming in Middle East Development Journal
Handle: RePEc:dlw:wpaper:13-08.
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