Meslek Yüksek Okulu

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Citation Count: OMAY, T., (2010). Türkiye için reaksiyon fonksiyonunun doğrusal olmayan modelle tahmin edilmesi. Çankaya University Journal of Humanities and Social Sciences, 7/2 (Kasım 2010), ss.467–490. ISSN 1309-6761
Türkiye için reaksiyon fonksiyonunun doğrusal olmayan modelle tahmin edilmesi
(Çankaya Üniversitesi, 2010) Omay, Tolga; Hasanov, Mübariz; 19320
In this paper we have estimated the monetary reaction function of the Central Bank of the Republic of Turkey. The originality of the paper is that we have used smooth transition functions (STR) that allow for proper modelling of nonlinearities and asymmetries in the relationship between variables under consideration. The estimated models suggest that the backward-looking instead of foreward-looking models best characterize the Central Bank’s reaction function, that is, the Central Bank reacted to past inflation rates rather than to future rates. This finding is in conformity with earlier research. We have found that the main purpose of expansionary policy of the Central Bank is to stabilize output whereas contractionary policies aimed only at reducing the inflation rate. The fact that the Central Bank has disregarded inflation in conducting expansionary policy and focused only on output stabilisation may explain why the Central Bank was not successful in fighting inflation. Besides, neither in expansionary policy regime nor in contractionary policy regime, real exchange rate is not targeted by the Central Bank. Moreover, budget deficit is targeted only in the contractionary policy regime

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