Modeling the Turkish Broad Money Demand

Defne Mutluer Kurul and Yasemin Barlas

Central Bank Review, 2002, vol. 2, issue 2, 55-75

Abstract: This paper analyzes broad money demand in Turkey between 1987 and 2001, a period characterized by a process of financial sector liberalization, implemented using various structural reforms and deregulations. It presents the historical background and the pace of liberalization, accompanied by a discussion on main economic indicators. It gives a brief summary on theory for the analysis of money demand and constructs an error correction model for M2X using quarterly data, where the long run relationship is established using real income, interest rate on deposits, interest rate on government securities, inflation rate and real exchange rate. The results show that, both exchange rate and inflation rate have substantial impact on the Turkish broad money demand.

Keywords: Money Demand; Financial Liberalization; Cointegration; Error-correction Modeling (search for similar items in EconPapers)
JEL-codes: C51 E40 E41 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (9)

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