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- Title
Taylor Rule in Practice: Evidence from Turkey.
- Authors
Adanur Aklan, Nejla; Nargelecekenler, Mehmet
- Abstract
This paper estimates the backward-looking and forward-looking monetary policy reaction functions of the Central Bank of the Republic of Turkey (CBRT) by considering the post-crisis period from August 2001 to September 2006, with a special emphasis on inflation targeting. Policies which the CBRT applied are analyzed according to the Taylor rule. The empirical results indicate that the CBRT followed the Taylor rule in its interest setting behaviour. In forward-looking models, the response coefficient of inflation and the output gap is greater than that of backward-looking models. The results of forward-looking models reflect, the policies conducted in Turkey. In the post-crisis period, expected inflation has been the main reaction variable for the CBRT. This suggests that monetary policy over the post-crisis period was not accommodating increases in expected inflation. The main conclusion is that ‘Taylor rule’ based monetary policies were effective in inflation targeting in Turkey.
- Subjects
TURKEY; TAYLOR'S rule; MATHEMATICAL models of monetary policy; CENTRAL Bank of the Republic of Turkey (Company); ECONOMIC policy; MONEY supply; CENTRAL banking industry; ANTI-inflationary policies; PRICE inflation
- Publication
International Advances in Economic Research, 2008, Vol 14, Issue 2, p156
- ISSN
1083-0898
- Publication type
Article
- DOI
10.1007/s11294-008-9148-9