IDEAS home Printed from https://ideas.repec.org/a/ris/betajl/0047.html
   My bibliography  Save this article

The Credibility Problem of the Central Bank of the Republic of Turkey: An Empirical Investigation

Author

Listed:

Abstract

Credibility gap that is defined as the difference between end-year inflation expectation and the inflation target is the main indicator to measure the credibility of a central bank that adopts the inflation targeting strategy. Within this scope, using monthly data spanning the period January 2006-April 2019, the goal of this paper is to examine whether the credibility gap of the Central Bank of the Republic of Turkey (CBRT) exhibits a mean-reverting or a random-walk behaviour. For this purpose, this paper employs unit root tests with different approximations in modelling structural breaks. The empirical findings indicate that the credibility gap of the CBRT has a unit root and demonstrates a random-walk behaviour. Put differently, the findings imply that the shocks affecting the credibility gap of the CBRT have persistence effects, meaning the CBRT has a credibility problem.

Suggested Citation

  • BULUT, Ümit, 2020. "The Credibility Problem of the Central Bank of the Republic of Turkey: An Empirical Investigation," Bulletin of Economic Theory and Analysis, BETA Journals, vol. 5(2), pages 1-15, December.
    • Handle: RePEc:ris:betajl:0047
    as

    Download full text from publisher

    File URL: https://dergipark.org.tr/tr/download/article-file/1143130
    File Function: Full text
    Download Restriction: betajournals@gmail.com
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Inflation Expectation; Credibility; Credibility Gap; The Central Bank of the Republic of Turkey; Unit Root Tests;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:betajl:0047. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Erginbay Ugurlu (email available below). General contact details of provider: https://dergipark.org.tr/beta .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.