Interest Rate Smoothing and Macroeconomic Instability under Post-Capital Account Liberalization Turkey
CANADIAN JOURNAL OF DEVELOPMENT STUDIES-REVUE CANADIENNE D ETUDES DU DEVELOPPEMENT, cilt.31, ss.459-482, 2010 (SSCI, Scopus)
- Yayın Türü: Makale / Tam Makale
- Cilt numarası: 31
- Basım Tarihi: 2010
- Dergi Adı: CANADIAN JOURNAL OF DEVELOPMENT STUDIES-REVUE CANADIENNE D ETUDES DU DEVELOPPEMENT
- Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus
- Sayfa Sayıları: ss.459-482
- Orta Doğu Teknik Üniversitesi Adresli: Evet
Özet
This paper considers the interest rate policy of the Central Bank of the Republic of Turkey (CBRT) in the post-financial liberalization and deregulation era. We find that (1) the Bank's interest rate smoothing tendency is the main determinant of its monetary policy in this period, (2) the CBRT does not seem to be responsive to the developments in real economy (output), and (3) although inflation targeting central banks are not supposed to pay attention to exchange rates, the CBRT appears to be slightly responsive to changes in real exchange rate. In answer to the question of whether there is a deeper underlying Structural constraint binding the CBRT's "independence," it seems clear that the global financial system is restricting the ability of the central banks to pursue "independent" policy objectives.