Measuring Monetary Policy for a Small Open Economy: Turkey
Journal of Macroeconomics
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Berument, H. (2007). Measuring monetary policy for a small open economy: Turkey. Journal of Macroeconomics, 29(2), 411-430.
Please cite this item using this persistent URLhttp://hdl.handle.net/11693/11573
This paper proposes a measure to assess the monetary policy for a highly inflationary small open economy: Turkey. The empirical evidence suggests that positive innovations in the spread between the Central Bank's interbank interest rate and the depreciation rate of the local currency mimic the properties of the tight monetary policy. These innovations, when they are positive, decrease income and prices, and appreciate the local currency. For prices and the exchange rate, the effects are permanent; but for income the effect is transitory. (c) 2007 Elsevier Inc. All rights reserved.