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2015 | OriginalPaper | Chapter

59. Pre-IT Policy, Post-IT Policy, and the Real Sphere in Turkey

Authors : Ahmed Hachicha, Cheng-Few Lee

Published in: Handbook of Financial Econometrics and Statistics

Publisher: Springer New York

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Abstract

We estimate two SVECM (structural vector error correction) models for the Turkish economy based on imposing short-run and long-run restrictions that account for examining the behavior of the real sphere in the pre-IT policy (before inflation-targeting adoption) and post-IT policy (after inflation-targeting adoption).

Responses reveal that an expansionary interest policy shock leads to a decrease in price level, a fall in output, an appreciation in the exchange rate, and an improvement in the share prices in the very short run for the most of pre-IT period.

Central Bank of the Republic of Turkey (CBT) stabilizes output fluctuations in the short run while maintaining a very medium-run inflation target since January 2006. One of the most important results of this study is that the impact of a monetary policy shock on the real sphere is insignificant during the post-IT policy.

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Title: Pre-IT Policy, Post-IT Policy, and the Real Sphere in Turkey
Authors: Ahmed Hachicha
Cheng-Few Lee
Publisher: Springer New York
Book: Handbook of Financial Econometrics and Statistics
Print ISBN: 978-1-4614-7749-5

Electronic ISBN: 978-1-4614-7750-1

Copyright Year: 2015
DOI: https://doi.org/10.1007/978-1-4614-7750-1_59