Measures of excess liquidity and inflation cycles in Turkey

Kazim Özdemir and Mesut Saygili ()

Iktisat Isletme ve Finans, 2009, vol. 24, issue 281, 31-59

Abstract: This paper examines measures of excess liquidity for Turkey and the role they play on the future price developments. The measures used in the study are the real money gap and its various sub-components such as pure money shocks and excess liquidity due to the money market. The coefficients, which are essential to calculate the equilibrium money stock and thereby the excess liquidities, are taken from the earlier studies on the broad money demand functions. After estimating the P-star model for Turkey, the paper concludes that despite the considerable fall in medium-term inflation rate in recent years, it is still short of satisfying CBRT’s medium to long-term inflation target of 4-5 percent.

Keywords: P-Star; Money Demand; Monetary Policy and Inflation Dynamics (search for similar items in EconPapers)
JEL-codes: E31 E41 E52 (search for similar items in EconPapers)
Date: 2009
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