 The interest rate–inflation relationship under an inflation targeting regime: The case of TurkeyNezir Kose, Furkan Emirmahmutoglu and Sezgin Aksoy Journal of Asian Economics, 2012, vol. 23, issue 4, 476-485 Abstract: This paper examines the relationship between nominal interest rates and the expected inflation rate for the Turkish economy between 2002 and 2009, a period when the inflation-targeting regime was implemented as monetary policy. We use the test of cointegrating rank with a trend-break (a method introduced by Inoue, 1999) and we also apply exogeneity tests. Empirical findings indicate that monetary policy rates depend on inflationary expectations; long-term interest rates are affected by monetary policy; and the weak form of the Fisher effect is valid. This evidence implies that monetary policy has actually influenced the real long-term interest rates; the inflation targeting regime pursued by the Central Bank of Turkey is reliable; and hence realized inflation has remained close to its targeted level. Keywords: Inflation targeting; Fisher effect; Term structure of interest rates; Cointegration with breaks; Exogeneity test (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:23:y:2012:i:4:p:476-485 DOI: 10.1016/j.asieco.2012.03.001 Access Statistics for this article Journal of Asian Economics is currently edited by C. Wiemer More articles in Journal of Asian Economics from Elsevier |
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