Exchange rate versus monetary aggregate targeting: the Turkish case

Arin K. P., GÜR T. H.

APPLIED ECONOMICS, cilt.41, sa.16, ss.2085-2092, 2009 (SSCI) identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 41 Sayı: 16
  • Basım Tarihi: 2009
  • Doi Numarası: 10.1080/00036840601019190
  • Dergi Adı: APPLIED ECONOMICS
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus
  • Sayfa Sayıları: ss.2085-2092
  • Hacettepe Üniversitesi Adresli: Evet

Özet

This article compares and contrasts the macroeconomic effects of exchange rate targeting and money supply targeting by using quarterly data from Turkey for the period February 1986-March 2000. The results of the VAR analysis show that the exchange rate does not have the traditional 'hump-shaped effect' that money supply has on output. In addition, we observe that an exchange rate depreciation leads to a temporary improvement in the trade balance for only a year, while monetary innovations have longer-lasting effects. Those results suggest that money-based targeting is more appropriate than exchange-rate targeting for Turkey.