In this study, a Monetary Conditions Index (MCI) for Turkey is constructed for the 2003-2008 period, using a VAR methodology. The MCI weights are estimated on the basis of generalized accumulated responses of the inflation rate to one standard deviation shock to the real short term interest rate and the real rate of appreciation. The responses of output and inflation to interest rate and exchange rate shocks exhibit patterns which point to the structural peculiarities of the Turkish economy. The monetary conditions reflected by the resulting index are consistent with the path of inflation and CBT remarks on the issue.
Key words: Monetary Policy, Turkey, Exchange Rate, VAR Article Language: EnglishTurkish
|
