The view of Sargent and Wallace on monetary policy: tight monetary policy does not stop inflation: an evaluation of CBRT’s monetary policy for 1987–2002

Baydur, Cem Mehmet; Süslü, Bora

doi:10.1016/j.jpolmod.2004.03.007

Cited by 3 publications

(3 citation statements)

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“…For Egypt, however, while the money supply is not statistically significant, it reduces the price level. To the best knowledge of the author, there is no study for Egypt, but the result for Iran is consistent with Bahmani-Oskooee's (1995) finding, though he uses M2.Our result for Turkey confirmsBaydur and Süslü's (2004) finding, i.e., the tight monetary policy in Turkey over the period 1989 to 1995 resulted in a rise in the general price level because of an outflow of foreign resources. However, their analysis is mostly a short-term study, while our finding(Table 3)is a long-run conclusion.…”

supporting

confidence: 85%

Deficits, debt financing, monetary policy and inflation in developing countries: Internal or external factors?

Kia

2006

Journal of Asian Economics

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This paper focuses on internal and external factors, which influence the inflation rate in developing countries. A monetary model of inflation rate, capable of incorporating both monetary and fiscal policies as well as other internal and external factors, was developed and tested on three developing countries: Egypt, Iran and Turkey. The model performed well on the data of these countries. It was found that government debt and deficits along with other factors are important determinants of inflation. Furthermore, most sources of inflation in these countries are domestic factors.

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confidence: 85%

Deficits, debt financing, monetary policy and inflation in developing countries: Internal or external factors?

Kia

2006

Journal of Asian Economics

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“…Us (2004) attributes the relatively high and inertial nature of the Turkish inflation mainly to the increases in public sector prices and the depreciation of domestic currency and indicates that high prices have not been as a result of expansionary monetary policy, leading to the inference that inertial nature of the Turkish inflation is not a monetary phenomenon. Baydur and Suslu (2004) conclude interestingly that the Central Bank of the Republic of Turkey (CBRT) assisted in the rise of inflation by implementing tight monetary policy from 1987 to 1997 and that it contributed to the fall of inflation by following relatively loose monetary policy after 1997. Besides, they estimate that the CBRT does not have a monopolistic power in controlling inflation rate.…”

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confidence: 99%

Modeling Base Money Demand and Inflation for the Turkish Economy

Saatçioğlu¹,

Korap²

2008

dogus

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In this paper, a reserve money demand model is tried to be constructed for the Turkish economy. Using contemporaneous multivariate co-integration methodology for the investigation period 1987Q1-2007Q3 of the quarterly observations, we find that the real income elasticity of money demand is highly greater than unity which means that there exists an ongoing monetization process with regard to the increases in the real income in the economy. The most important alternative cost against the real money holdings seems to be the expected depreciation rate of the domestic currency against the exchange rate. Such a finding reveals the importance of currency substitution phenomenon dominated in the economy when the economic agents determine the motives of demand for monetary balances. Furthermore, a critical finding estimated in the paper is that domestic inflation has a weakly exogenous characteristic in the money demand variable space which requires no dynamic error correction model constructed on domestic inflation as a function of the excess money demand taken place under the money market disequilibrium conditions.

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“…Sel Dibooglu and Aykut Kibritcioglu (2004) emphasize that dis-inflation programs applied in the Turkish economy must have credible commitment mechanisms that restrain discretionary aggregate demand policies. Cem Mehmet Baydur and Bora Süslü (2004) estimate that the Central Bank of the Republic of Turkey (CBRT) assisted in the rise of inflation by implementing tight monetary policy from 1987 to 1997 and that it contributed to the fall of inflation by following relatively loose monetary policy after 1997. They also state that the CBRT does not have monopolistic power in controlling the inflation rates.…”

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confidence: 99%

A cost-based empirical model of the aggregate price determination for the Turkish economy: A multivariate cointegration approach

Zeren

Korap

2010

Panoeconomicus

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This paper tries to examine the long run relationships between the aggregate consumer prices and some cost-based components for the Turkish economy. Based on a simple economic model of the macro-scaled price formation, multivariate cointegration techniques have been applied to test whether the real data support the a priori model construction. The results reveal that all of the factors, related to the price determination, have a positive impact on the consumer prices as expected. We find that the most significant component contributing to the price setting is the nominal exchange rate depreciation. We also cannot reject the linear homogeneity of the sum of all the price data as to the domestic inflation. The paper concludes that the Turkish consumer prices have in fact a strong cost-push component that contributes to the aggregate pricing

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The view of Sargent and Wallace on monetary policy: tight monetary policy does not stop inflation: an evaluation of CBRT’s monetary policy for 1987–2002

Cited by 3 publications

References 5 publications

Deficits, debt financing, monetary policy and inflation in developing countries: Internal or external factors?

Deficits, debt financing, monetary policy and inflation in developing countries: Internal or external factors?

Modeling Base Money Demand and Inflation for the Turkish Economy

A cost-based empirical model of the aggregate price determination for the Turkish economy: A multivariate cointegration approach

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