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Inflation Targeting in Turkey

Author

Listed:
  • Hasan Ersel

    (Sabanci University, , Istanbul, Turkey)

  • Fatih Özatay

    (TOBB University of Economics and Technology, Ankara, Turkey)

Abstract

In the aftermath of the 2000-2001crisis the banking sector in Turkey was in turbulence requiring immediate action. The rescue operation sky-rocketed the public debt-to-gross domestic product ratio. The fiscal dominance caused by high public debt put a severe constraint on the conduct of monetary policy. Other challenges were the high exchange rate pass-through, inflation inertia, and the weak banking sector. This paper provides an account of the monetary policy experience of Turkey after the crisis. It focuses on the reasons behind adopting informal inflation targeting, i.e. a transition phase, before moving into formal inflation targeting in 2006.

Suggested Citation

  • Hasan Ersel & Fatih Özatay, 2008. "Inflation Targeting in Turkey," Working Papers 445, Economic Research Forum, revised 09 Jan 2008.
    • Handle: RePEc:erg:wpaper:445
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    References listed on IDEAS

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    Cited by:

    1. Nadia Saleem, 2010. "Adopting Inflation Targeting in Pakistan: An Empirical Analysis," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(2), pages 51-76, Jul-Dec.
    2. Fatih Özatay, 2008. "Expansionary Fiscal Consolidations: New Evidence from Turkey," Working Papers 406, Economic Research Forum, revised 06 Jan 2008.
    3. Markus Kirchner & Malte Rieth, 2010. "Sovereign Risk and Macroeconomic Fluctuations in an Emerging Market Economy," Tinbergen Institute Discussion Papers 10-100/2, Tinbergen Institute.

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