Monetary policy rules in practice: Re-examining the case of Turkey

Mübariz Hasanov and Tolga Omay

Physica A: Statistical Mechanics and its Applications, 2008, vol. 387, issue 16, 4309-4318

Abstract: This paper investigates possible asymmetries in the monetary policy reaction function of the Central Bank of Republic of Turkey over the business cycles. It is found that the bank reacted more aggressively towards output stabilisation during recessions than expansions. The empirical evidence suggests that the inflation targeting policy of the Turkish Central Bank was accommodative rather than stabilising. Furthermore, it is found that although the Central Bank of Republic of Turkey responded to foreign reserves, real exchange rates and short-term capital inflows both in expansion and recession periods, the bank targeted money growth, budget deficits, and net foreign assets only in expansion periods.

Keywords: Monetary policy; Spread; Reaction function; Nonlinearity; Asymmetry (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:387:y:2008:i:16:p:4309-4318

DOI: 10.1016/j.physa.2008.02.075

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