Financial crisis, monetary policy reform and the monetary transmission mechanism in Turkey

James Butkiewicz and Zeliha Ozdogan

Middle East Development Journal, 2014, vol. 6, issue 1, 66-83

Abstract: Turkey experienced a financial crisis in 2000–2001, which led to significant financial reforms. The reforms resulted in a switch to a floating exchange rate, granted greater central bank independence and pursuit of a more credible monetary policy. Investigation of the channels of monetary policy in both periods finds that monetary policy's output effects have been strengthened considerably by the reforms. In the pre-crisis period, monetary policy was highly inflationary, while in the post-crisis period, monetary policy targets low inflation and has become a tool for output stabilization. These results support the importance of central bank independence and a credible policy.

Date: 2014
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Working Paper: Financial crisis, monetary policy reform and the monetary transmission mechanism in Turkey (2013)
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DOI: 10.1080/17938120.2014.885484

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