Asymmetries in monetary policy reaction function and the role of uncertainties

The case of Turkey

Bibliographic Data

ID15067320
AuthorsPelin Öge Güney (0000-0002-2093-9133, Department of Economics, Hacettepe University, Ankara, Turkey, corresponding author)
Year2018
Volume31
Issue1
Pages1367-1381
Publication date2018-01-01
Open AccessYes
TypeARTICLE
VenueEconomic Research-Ekonomska Istraživanja (JOURNAL)
Journal identifiersISSN: 1331-677X • E-ISSN: 1848-9664
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/1331677x.2018.1481445
OpenAlexW2811295746
LanguageEN
References cited53

We analyse the effects of inflation and growth uncertainty on the monetary policy reaction function of the Central Bank Republic of Turkey (C.B.R.T.), considering possible asymmetries in the reaction function over the business cycle. We follow Bec, Salem, and Collard’s approach in order to specify an asymmetric reaction function suggesting that central banker interventions are influenced by business cycles. Our results reveal that the C.B.R.T. has asymmetric preferences. We find that the C.B.R.T. targets inflation stabilisation, both in recession and expansion periods. Moreover, the C.B.R.T. reacts more aggressively to any inflation gap during recessions than it does during expansions. On the other hand, the C.B.R.T. tries to smooth fluctuations in output, both during recessions and expansions. We further discover that the C.B.R.T. reacts to inflation and growth uncertainties more aggressively in expansion periods

Business cycle · Central bank · Economics · Inflation targeting · Keynesian economics · Monetary economics · Monetary policy · Output gap · Physics · Recession · Global Financial Crisis and Policies · Market Dynamics and Volatility · Monetary Policy and Economic Impact · Finance

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Open DOISci-HubOpen Access