Credit channel and capital flows: a macroprudential policy tool? – evidence from Turkey

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buir.contributor.authorBerument, Hakan
dc.citation.epage170en_US
dc.citation.issueNumber1en_US
dc.citation.spage145en_US
dc.citation.volumeNumber16en_US
dc.contributor.authorVarlik, S.en_US
dc.contributor.authorBerument, Hakanen_US
dc.date.accessioned2016-02-08T10:28:19Z
dc.date.available2016-02-08T10:28:19Z
dc.date.issued2016en_US
dc.departmentDepartment of Economicsen_US
dc.description.abstractRapid credit growth induced by sudden capital inflows may negatively affect a country's economic performance, with the resulting outflows turning into a financial crisis. The purpose of this study is to determine whether controlling the credit channel of monetary policy could be used as a macroprudential tool to suppress the effects of sudden capital inflows on economic performance for small open economies like Turkey. In this paper, using the Vector Autoregression methodology employed by (Bernanke, S. B., M. Gertler, and M. Watson. 1997. "Systematic Monetary Policy and the Effects of Oil Price Shocks." Brookings Papers on Economic Activity 1: 91-157), we investigate whether shutting down the credit channel helps reduce the effects of capital inflows. Indeed, empirical evidence from Turkey shows that doing so decreases the effects of capital inflows on imports and industrial production, but further decreases interest rate and prices and further appreciates the domestic currency. Therefore, it may be prudent to support credit control with additional policy tools to prevent a further decrease in interest rate and prices and a further appreciation of the domestic currency. © 2016 by De Gruyter 2016.en_US
dc.description.provenanceMade available in DSpace on 2016-02-08T10:28:19Z (GMT). No. of bitstreams: 1 bilkent-research-paper.pdf: 70227 bytes, checksum: 26e812c6f5156f83f0e77b261a471b5a (MD5) Previous issue date: 2016en
dc.identifier.doi10.1515/bejm-2015-0052en_US
dc.identifier.eissn1935-1690
dc.identifier.issn2194-6116
dc.identifier.urihttp://hdl.handle.net/11693/24369en_US
dc.language.isoEnglishen_US
dc.publisherWalter de Gruyteren_US
dc.relation.isversionofhttp://dx.doi.org/10.1515/bejm-2015-0052en_US
dc.source.titleB.E. Journal of Macroeconomicsen_US
dc.subjectCapital flowsen_US
dc.subjectCredit channelen_US
dc.subjectMacroeconomic prudential policyen_US
dc.titleCredit channel and capital flows: a macroprudential policy tool? – evidence from Turkeyen_US
dc.typeArticleen_US

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