Browsing by Subject "Central bank"

Now showing 1 - 9 of 9

Open Access
The choice of monetary policy tool(s) and relative price variability: evidence from Turkey
(A N S I Network, 2009) Berument, Hakan; Sahin, A.; Saracoglu, B.
The aim of this study is to assess any regularity relative price dispersion for the effect of monetary policy tool selection. Central banks use tools such as interbank rate and exchange rate when pursuing their (monetary) policies. The selected tools affect economic variables differently. By using Turkish monthly data for the 1988:2-2008:2 period, this study suggests that pure policies (such as interbank rate only or exchange rate only) increase relative price variability more than mixed policies, where the monetary authorities use the above tools simultaneously. © 2009 Asian Network for Scientific Information.
Open Access
The dynamics of a newly floating exchange rate: the Turkish case
(Routledge, 2006) Ardıç, O. P.; Selçuk, F.
In recent years, many emerging market economies have switched or are in the process of switching to a floating exchange rate regime. Most of these economies have a history of high inflation and a high level of foreign currency denominated debt. Therefore, the stability of the exchange rate and the dynamics of its volatility are more crucial than before. This paper analyses the dynamics of exchange rate in Turkey in the aftermath of recent float in February 2001. The Turkish experience is a particularly important one, and provides valuable lessons for other countries as the Central Bank is trying to simultaneously contain the volatility of exchange rate and pursue an implicit inflation targeting policy. The reported findings indicate that the Central Bank policies, accompanied with favourable external factors, were effective in taming the volatility of the exchange rate in a relatively short period of time. However, there is a significant real appreciation of the currency during the same period. Given the high level of public debt and real interest rates, the current state of the economy is very susceptible to any adverse shocks. © 2006 Taylor & Francis.
Open Access
Effect of central bank governor speeches on financial markets
(2024-09) Turan, Fatma Senem
This thesis examines the impact of speeches by central bank governors from European Central Bank (ECB), Deutsche Bundesbank, Bank of France, Bank of Spain and Bank of Italy on OIS yields, bond yields, stock prices and exchange rate. Using two standard event study designs via Rigobon and Sack (2004) and Gürkaynak et al. (2005), the study finds that financial markets are sensitive to central bank governor speeches. OIS and sovereign bond yields with maturities from 5 to 30 years respond significantly to central bank speeches. For stock prices, the analysis includes the Euro Stoxx50, Euro SX7E, German DAX30, French CAC40, Spanish IBEX35, and Italian MIB30. Even if there are some positive responses, the results align with the typical understanding that a negative relationship exists between stock prices and monetary policy shocks. Lastly, the exchange rate is the least responsive asset among the others, with significant reactions observed in speeches by the ECB governor and the Bundesbank governor on the euro- USD dollar exchange Overall, national central bank governors affect financial markets. Among various assets, their voices are particularly influential. However, while the speeches of periphery countries’ central bank governors have an impact, ECB governor speeches usually dominate those of the periphery countries’ central bank governor speeches. In contrast, the central bank governor speeches of core countries, Germany and France, often have more influence than ECB governor speeches.
Open Access
The effectiveness of foreign exchange interventions under a floating exchange rate regime for the Turkish economy: a post-crisis period analysis
(Routledge, 2006) Akinci, Ö.; Çulha, O. Y.; Özlale, Ü.; Şahinbeyoǧlu, G.
The reported study has two purposes: first, it attempts to improve the literature on foreign exchange interventions of the central banks for the emerging market economies, an area not previously studied in detail. The Turkish economy in the post-crisis period constitutes a good example in this context. Second, it proposes a new methodology, a time-varying parameter model, to analyse the effectiveness of the foreign exchange interventions. When the results from such an exercise are compared with those obtained from an event-study analysis, it is found that purchase-based interventions seem to be successful, especially after stabilization of the financial markets. In that sense, an asymmetry is detected regarding the effectiveness of interventions. Concerning the relationship between interest rates and exchange rates, it is found that the uncovered interest rate parity condition operates in an unconventional way, supporting the views put forward by recent emerging markets literature. © 2006 Taylor & Francis.
Open Access
Effectiveness of the reserve option mechanism as a macroeconomic prudential tool: evidence from Turkey
(Routledge, 2015) Sahin, A.; Dogan, B.; Berument, Hakan
This article assesses the effectiveness of a novel macroprudential tool – the reserve option mechanism (ROM) – which Turkey’s central bank developed during the post-2008 period and has employed to control the risk associated with excessive capital flows. We assess how capital flows have affected economic variable changes since the introduction and usage of the ROM. Empirical evidence gathered from Turkey suggests that the tool decreases the effect of capital flow on capital flow (positive shock to capital flow dies out faster or becomes less persistent) and diminishes the effects of capital flow shocks on exchange and interest rates. © 2015 Taylor & Francis.
Open Access
The implicit reaction function of the Central Bank of the Republic of Turkey
(Routledge, 2000) Berument, Hakan; Malatyali, K.
Reviewing the implicit reaction function estimation under different specifications, it appears that the Central Bank of the Republic of Turkey (CBRT) responds to the lagged inflation rate rather than the forward one, M2Y growth is targeted on an annual basis and a serious output targeting policy was implemented while neither real nor nominal depreciation of the foreign currency basket was taken into consideration during the period 1989:07-1997:03. Also, we conclude that the CBRT does not target currency issued, M2, net domestic assets or net foreign assets nor does it take any of the budget deficit measures into account while determining its monetary policy.
Open Access
Introduction
(Palgrave Macmillan, London, 2015) Gürkaynak, Refet S.; Stiglitz, J. E.; Gürkaynak, Refet S.
Currency flows have always been a leading policy concern, especially in emerging markets. The long Japanese slump, the ensuing very low interest rates in Japan that have lasted 20 years, and the carry trades this fostered made currency flows a hot topic again, even before the global financial crisis increased liquidity in all developed economies and led to a new wave of currency flows to emerging market economies.
Open Access
Monetary policy rules in practice: evidence from Turkey
(John Wiley & Sons Ltd., 2004) Berument, Hakan; Taşçı, H.
This paper estimates a forward-looking monetary policy reaction function of the Central Bank of the Republic of Turkey by considering the period from 1990:01 to 2000:10. When the spread between the interbank rate and depreciation rate of the local currency is taken as a policy tool, the empirical evidence suggests that the Turkish Central Bank responds to its foreign exchange reserves, output and M2 growth not the forward, current or lagged inflation. © 2003 John Wiley and Sons, Ltd.
Open Access
The policy challenge with floating exchange rates: Turkey's recent experience
(Springer New York LLC, 2005) Selçuk, F.
This paper evaluates the developments in the Turkish economy in light of the Central Bank of Turkey's (CBT) policies during a recent period of floating exchange rate system (March 2001-July 2003). It is found that the CBT was effective in containing volatility and reducing the average inflation rate while there was a strong recovery of output. However, there are accumulated risks in the economy. Particularly, the extreme appreciation of the Turkish lira during this period and the record level of real interest rates give the impression that the current state of the economy is fragile. Unless the government accelerates the structural reform process and pursues sound fiscal policies to reduce the public sector borrowing requirement and the debt ratio, an adverse shock to the system may trigger a reversal of fortune. © 2005 Springer Science + Business Media, Inc.