The Effect of Money Supply on the Inflation the Period between 1980-2013 in Turkey Economy

İsmail Şahin () and Muhammet Karanfil ()
Additional contact information
İsmail Şahin: Canakkale 18 Mart University
Muhammet Karanfil: Canakkale 18 Mart University

Business and Economics Research Journal, 2015, vol. 6, issue 4, 97-113

Abstract: To provide the economic stability, in the fight against the inflation problem, various monetary and fiscal policies have been applied in different periods in Turkey. In spite of these policies, inflation has not been taken to the expected level in the certain period. However, in recent years the decline in the inflation has demonstrated that the policies which were implemented were effective. At the end of these policies, the object is achieved partly which, was targeted in the inflation. The main purpose of the study is to search the effect of money supply on inflation. Besides, the relationship between the effectiveness of the implemented policies and the other macro-economic variables which are related to the inflation phenomenon has been evaluated. In this context, for the period between 1980 and 2013 in Turkey, the money supply, reel exchange rates and budget deficit and their impact on the inflation has been discussed. In this paper, the effect of some macro-economic variables such as the money supply, reel exchange rate and budget deficit on inflation has been analyzed by using the time series analysis. In the model, the inflation rate is dependent variable, while the money supply, reel exchange rate and budget deficit are independent variables. At the same time, the relationship between variables has been researched by using the Johansen’s co-integration and Granger’s causality methodology. In conclusion, there has been a long-term relationship between the variables in the model. On the other hand, there has been no direct causality between the money supply and inflation variables.

Keywords: Inflation rate; money supply (m2); monetary policy; co-integration; causality (search for similar items in EconPapers)
JEL-codes: C13 C32 E31 (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.berjournal.com/the-effect-of-money-supp ... 13-in-turkey-economy Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:buecrj:0205

Access Statistics for this article

Business and Economics Research Journal is currently edited by Adem Anbar

More articles in Business and Economics Research Journal from Uludag University, Faculty of Economics and Administrative Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Adem Anbar ().