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Effects of additional monetary tightening on exchange rates

Author

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  • Ergun Ermisoglu
  • Yasin Akcelik
  • Arif Oduncu
  • Temel Taskin

Abstract

Since the global financial crisis, central banks have used various policy tools to sustain financial stability in addition to price stability. Additional Monetary Tightening (AMT) is one of these tools that the Central Bank of the Republic of Turkey used in 2011–2012. The effects of this tool on the exchange rate are the main theme of this paper. Our analysis indicates that AMT has a significant role in reducing volatility in the exchange rate. We also show that during the days of additional tightening Turkish Lira appreciated against the other emerging market currencies. Copyright Eurasia Business and Economics Society 2014

Suggested Citation

  • Ergun Ermisoglu & Yasin Akcelik & Arif Oduncu & Temel Taskin, 2014. "Effects of additional monetary tightening on exchange rates," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 4(1), pages 71-79, June.
    • Handle: RePEc:spr:eurase:v:4:y:2014:i:1:p:71-79
    DOI: 10.1007/s40822-014-0004-3
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    Cited by:

    1. Sayuri Shirai, 2014. "Japan’s monetary policy in a challenging environment," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 4(1), pages 3-24, June.
    2. repec:agr:journl:v:4(605):y:2015:i:4(605):p:133-144 is not listed on IDEAS
    3. repec:agr:journl:v:4(605):y:2015:i:4(605):p:135-146 is not listed on IDEAS
    4. Değerli, Ahmet & Fendoğlu, Salih, 2015. "Reserve option mechanism as a stabilizing policy tool: Evidence from exchange rate expectations," International Review of Economics & Finance, Elsevier, vol. 35(C), pages 166-179.
    5. Umit BULUT, 2015. "The Interest Rate Corridor as a Macroprudential Tool to Mitigate Rapid Growth in Credits: Evidence from Turkey," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(605), W), pages 133-144, Winter.
    6. Ahmet Aysan & Salih Fendoglu & Mustafa Kilinc, 2014. "Managing short-term capital flows in new central banking: unconventional monetary policy framework in Turkey," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 4(1), pages 45-69, June.
    7. Christos Kollias & Stephanos Papadamou & Costas Siriopoulos, 2016. "Stock markets and effective exchange rates in European countries: threshold cointegration findings," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 6(2), pages 215-274, August.

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    More about this item

    Keywords

    Additional monetary tightening; Central Bank of the Republic of Turkey’s New Policy Mix; Turkish Lira; Emerging markets; C22; E58;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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