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

James L. Butkiewicz () and Zeliha Ozdogan ()
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Zeliha Ozdogan: Director of Research and Statistics, SBT ANALYSIS

No 09-04, Working Papers from University of Delaware, Department of Economics

Abstract: Turkey experienced a financial crisis in 2000-2001 which 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.

Keywords: monetary transmission mechanism; central bank independence; inflation targeting. (search for similar items in EconPapers)
JEL-codes: E42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara, nep-cba, nep-cwa, nep-mac and nep-mon
Date: 2009
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Persistent link: http://EconPapers.repec.org/RePEc:dlw:wpaper:09-04.

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