Monetary Policy in Turkey after Central Bank Independence

CFS Working Paper No. 520

33 Pages Posted: 21 Oct 2015

See all articles by Refet S. Gürkaynak

Refet S. Gürkaynak

Bilkent University

Zeynep Kantur

Bilkent University

M. Anıl Taş

Bilkent University

Seçil Yıldırım

Bilkent University

Date Written: August 30, 2015

Abstract

We present an accessible narrative of the Turkish economy since its great 2001 crisis. We broadly survey economic developments and pay particular attention to monetary policy. The data suggests that the Central Bank of Turkey was a strong inflation targeter early in this period but began to pay less attention to inflation after 2009. Loss of the strong nominal anchor is visible in the break we estimate in Taylor-type rules as well as in asset prices. We also argue that recent discrete jumps in Turkish asset prices, especially the exchange value of the lira, are due more to domestic factors. In the post-2009 period the Central Bank was able to stabilize expectations and asset prices when it chose to do so, but this was the exception rather than the rule.

Keywords: Turkey, CBRT, monetary policy, fiscal policy

JEL Classification: E52, E62, E31, E32, E02

Suggested Citation

Gürkaynak, Refet S. and Kantur, Zeynep and Taş, M. Anıl and Yıldırım, Seçil, Monetary Policy in Turkey after Central Bank Independence (August 30, 2015). CFS Working Paper No. 520. Available at SSRN: https://ssrn.com/abstract=2676570 or http://dx.doi.org/10.2139/ssrn.2676570

Refet S. Gürkaynak (Contact Author)

Bilkent University

No Address Available

Zeynep Kantur

Bilkent University ( email )

Bilkent, Ankara 06533
Turkey

M. Anıl Taş

Bilkent University ( email )

Bilkent, Ankara 06800
Turkey

Seçil Yıldırım

Bilkent University ( email )

Bilkent, Ankara 06533
Turkey

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