@article{article_992149, title={Reaction of Monetary policy to Cost-Push Inflation in Turkey: A Leaning against Wind?}, journal={Eskişehir Osmangazi Üniversitesi İktisadi ve İdari Bilimler Dergisi}, volume={17}, pages={256–271}, year={2022}, DOI={10.17153/oguiibf.992149}, author={Tetik, Metin and Bari, Bilgin}, keywords={Inflation, Cost-push Shocks, Taylor Rule, Threshold Generalized Methods of Moment}, abstract={In Turkey, monetary policy responds to cost shocks rather than the inflation gap and output gap. To clarify this policy, we estimate the linear and non-linear Taylor rule using the Thresold GMM for 2006:01-2020:07. The linear model estimates that the policy rate responds significantly to the inflation gap and the real effective exchange rate. The non-linear model captures that monetary policy differs in regimes where imported goods and input prices are set as high and low. In a high price regime, monetary policy also reacts to cost-push shocks. The response of monetary policy to the exchange rate implicitly leads to "a leaning against the wind".}, number={1}, publisher={Eskişehir Osmangazi University}