EconPapers    
Economics at your fingertips  
 

Monetary Approach to Exchange Rate Determination under Flexible Exchange Rate Regime: Empirical Evidence from Turkey

Bahar Erdal

Advances in Management and Applied Economics, 2018, vol. 8, issue 3, 1

Abstract: The aim of this paper is to analyze empirically flexible price monetary approach to exchange rate determination in Turkey under flexible exchange rate regime. The cointegration analysis and error correction model is used to test long-run relationship and short-run effects respectively. The cointegration analysis show that there is a long-run relationship between nominal exchange rate, money supply differential and nominal interest rate differential. So, it could be said that flexible price monetary model is valid in the long-run in Turkey under flexible exchange rate regime. The money supply differential positively and nominal interest rate differential negatively affect the nominal exchange rate as expected. In the short-run, nominal interest rates are more responsive to correct long-run disequilibrium of nominal exchange rates. Â Â JEL classification numbers: F31, C12, C32Keywords: Exchange rate determination, flexible exchange rate regime, monetary approach, cointegration analysis, error correction model

Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.scienpress.com/Upload/AMAE%2fVol%208_3_1.pdf (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:spt:admaec:v:8:y:2018:i:3:f:8_3_1

Access Statistics for this article

More articles in Advances in Management and Applied Economics from SCIENPRESS Ltd
Bibliographic data for series maintained by Eleftherios Spyromitros-Xioufis ().

 
Page updated 2020-06-02
Handle: RePEc:spt:admaec:v:8:y:2018:i:3:f:8_3_1