ANALYZING MONETARY POLICY REGARDING INTEREST RATE, INFLATION AND OUTPUT GAP: EVIDENCE FROM TURKEY (2006-2018)

Fatih Mangir ()
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Fatih Mangir: Selçuk Üniversitesi

Eurasian Academy Of Sciences Social Sciences Journal, 2018, vol. 22, issue 22, 58-68

Abstract: The purpose of this paper is to analyse and test econometrically whether monetary policy follows Taylor rule since the adoption of inflation targeting by Turkey in 2006. Our estimates of the Taylor rule yield two significant findings, the Central Bank of Republic of Turkey ‘s policy rate decisions respond to changes in inflation, but policy response is unlikely to be explained by the real economy fluctuations. We conclude that under inflation targeting, in Turkey, the interest rate, inflation rate and output level relationship did not move consistent with the Taylor rule.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eas:journl:v:22:y:2018:i:22:p:58-68

DOI: 10.17740/eas.soc.2018.V22-02

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