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Identifying the Liquidity Effects of Monetary Policy Shocks For a Small Open Economy: Turkey

  • Berument, Hakan
  • Togay, Selahattin
  • Sahin, Afsin

This paper proposes a new liquidity measure for a small open economy. The new measure includes the net liquidity provided to the system by a central bank after accounting for the central bank’s involvement in the foreign exchange market. Empirical evidence gathered from Turkey suggests that a positive innovation in liquidity increases output temporarily and that its effect on prices, exchange rate and money are permanently higher.

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File URL: http://mpra.ub.uni-muenchen.de/46883/1/MPRA_paper_46883.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 46883.

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Date of creation: Sep 2011
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Publication status: Published in Open Economies Review 4.22(2011): pp. 649-667
Handle: RePEc:pra:mprapa:46883
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Web page: http://mpra.ub.uni-muenchen.de

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