Determinants of interest rates in Turkey

Date

2001

Editor(s)

Advisor

Supervisor

Co-Advisor

Co-Supervisor

Instructor

BUIR Usage Stats
3
views
70
downloads

Series

Abstract

This paper analyzes the Turkish Treasury interest rate behaviour within the Fisher hypothesis framework for the period from 1988:11 to 1998:6. Consistent with the hypothesis, empirical evidence indicates that the interest rates increase with expected inflation. After the risk is controlled, the paper suggests that interest rates increase less than expected inflation; that is, real interest rates decrease with higher inflation. Moreover, inflation risk increases interest rates and decreases the maturity of government debt: This is evidence that lenders prefer shorter maturity in order to hedge themselves in a setting where the debt burden on the budget is on the rise. This may also indicate that both the interest rates and maturity of the debt are used as policy tools by the Treasury rather than as state variables.

Source Title

Russian and East European Finance and Trade

Publisher

Taylor & Francis, Ltd

Course

Other identifiers

Book Title

Keywords

Degree Discipline

Degree Level

Degree Name

Citation

Published Version (Please cite this version)

Language

English