Fear of Floating in Turkey

İlyas Şıklar and Taner Sekmen ()

Business and Economic Research, 2015, vol. 5, issue 2, 288-307

Abstract: Many emerging markets have adopted floating exchange rate regimes after currency crises. Turkey has experienced a floating regime since 2002 combined with inflation targeting. The aim of this paper is to investigate the ¡°fear of floating¡± phenomenon, named by Calvo and Reinhart (2002), in the transition to a low and stable inflation environment in Turkey before and after inflation targeting. The results demonstrate that the levels of exchange rate pass-through decreased substantially, thus weakening the ¡°fear of floating¡± phenomenon in Turkey after inflation targeting. Therefore, we argue whether any reactions of the central bank to foreign exchange rates imply the ¡°fear of floating¡± or the ¡°fear of inflation¡±

Keywords: Inflation targeting; Exchange rate; Fear of floating; Turkey (search for similar items in EconPapers)
JEL-codes: E52 E58 F41 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:mth:ber888:v:5:y:2015:i:2:p:288-307

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