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Modeling the Turkish Broad Money Demand

Author

Listed:
  • Defne Mutluer
  • Yasemin Barlas

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.

Suggested Citation

  • Defne Mutluer & Yasemin Barlas, 2002. "Modeling the Turkish Broad Money Demand," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 2(2), pages 55-75.
    • Handle: RePEc:tcb:cebare:v:2:y:2002:i:2:p:55-75
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Levent, Korap, 2008. "Modeling Turkish M2 broad money demand: a portfolio-based approach using implications for monetary policy," MPRA Paper 19703, University Library of Munich, Germany.
    2. Yannick Roussel & Amjad Ali & Marc Audi, 2021. "Measuring The Money Demand In Pakistan: A Time Series Analysis," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 10(1), pages 27-41, March.
    3. Mr. Robert Tchaidze & Mr. Salome Tvalodze, 2011. "Deposit Formation in Georgia," IMF Working Papers 2011/078, International Monetary Fund.
    4. Ozge Akinci, 2003. "Modeling the Demand for Currency Issued in Turkey," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 3(1), pages 1-25.
    5. Cem Saatçioðlu & Levent Korap, 2007. "Turkish Money Demand, Revisited: Some Implications For Inflation And Currency Substitution Under Structural Breaks," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 21(1+2), pages 107-124.
    6. PELINESCU, Elena & SIMIONESCU, Mihaela, 2014. "Modelling And Predicting The Real Money Demand In Romania," Journal of Financial and Monetary Economics, Centre of Financial and Monetary Research "Victor Slavescu", vol. 1(1), pages 117-124.
    7. Mouyad Alsamara & Zouhair Mrabet, 2019. "Asymmetric impacts of foreign exchange rate on the demand for money in Turkey: new evidence from nonlinear ARDL," International Economics and Economic Policy, Springer, vol. 16(2), pages 335-356, April.

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    More about this item

    Keywords

    Money Demand; Financial Liberalization; Cointegration; Error-correction Modeling;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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