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Inflation Targeting and Monetary Policy Rules: Further Evidence from the Case of Turkey

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  • Giray Gozgor

Abstract

In this paper, we attempt to estimate reaction functions of the Central Bank of the Republic of Turkey (CBRT) based on Taylor rule and Hybrid McCallum-Taylor rule. We apply Generalized Methods of Moments (GMM) and Limited Information Maximum Likelihood (LIML) methods for estimating monetary policy reaction functions, over the period when the CBRT has conducted inflation targeting by using nominal interest rate as a monetary policy tool in free floating exchange rate regime. Our efficient and robust empirical findings show that only Taylor rule specifications are able to explain the behaviour of the CBRT.

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  • Giray Gozgor, 2012. "Inflation Targeting and Monetary Policy Rules: Further Evidence from the Case of Turkey," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 2(5), pages 1-7.
    • Handle: RePEc:spt:apfiba:v:2:y:2012:i:5:f:2_5_7
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    Cited by:

    1. Giray Gozgor, 2013. "The New Keynesian Phillips Curve in an Inflation Targeting Country: The Case of Turkey," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 6(1), pages 7-18, April.
    2. ERDEM Ekrem & BULUT Umit & KOCAK Emrah, 2017. "Have Financial Stability Concerns Changed The Priority Of The Central Bank Of The Republic Of Turkey?," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 12(2), pages 35-45, August.
    3. Williams Ohemeng & Elvis Kwame Agyapong & Kenneth Ofori-Boateng, 2021. "Exchange rate and inflation dynamics: does the month or quarter of the year matter?," SN Business & Economics, Springer, vol. 1(6), pages 1-24, June.
    4. Baris Soybilen & Burak Alparslan Eroglu, 2019. "Time-Varying Taylor Rule Estimation for Turkey with Flexible Least Square Method," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 33(2), pages 1-20.
    5. Umit Bulut, 2016. "How Far Ahead Does the Central Bank of the Republic of Turkey Look?," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 5(1), pages 99-111.
    6. Helena Glebocki Keefe, 2020. "The impact of exchange rate volatility on inflation targeting monetary policy in emerging and advanced economies," International Finance, Wiley Blackwell, vol. 23(3), pages 417-433, December.

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