Discussion Paper Details

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Title: Monetary Policy in Turkey after Central Bank Independence

Author(s): Refet S. Gürkaynak, Zeynep Kantur, Mustafa Anil Tas and Secil Yildirim

Publication Date: October 2015

Keyword(s): CBRT, fiscal policy, monetary policy and Turkey

Programme Area(s): Monetary Economics and Fluctuations

Abstract: We present an accessible narrative of the Turkish economy since its great 2001 crisis. We broadly survey economic developments and pay particular attention to monetary policy. The data suggests that the Central Bank of Turkey was a strong inflation targeter early in this period but began to pay less attention to inflation after 2009. Loss of the strong nominal anchor is visible in the break we estimate in Taylor-type rules as well as in asset prices. We also argue that recent discrete jumps in Turkish asset prices, especially the exchange value of the lira, are due more to domestic factors. In the post-2009 period the Central Bank was able to stabilize expectations and asset prices when it chose to do so, but this was the exception rather than the rule.

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Bibliographic Reference

Gürkaynak, R, Kantur, Z, Tas, M and Yildirim, S. 2015. 'Monetary Policy in Turkey after Central Bank Independence'. London, Centre for Economic Policy Research.