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The Relation between Monetary Policy Preferences and Unemployment Rates

Year 2018, Volume: 18 Issue: 1, 31 - 46, 01.02.2018

Abstract

The aim of this study is to examine the relation between CBRT’s monetary policy preferences and unemployment rates for the periods of 1999-2014. We consider Taylor rule as a monetary policy rule and employ Markov regime-switching model to determine the periods of “active” and “passive” monetary policy regimes. After that, we find higher unemployment rates in the periods of active monetary policy regime by using propensity score matching. These findings suggest that the CBRT should conduct monetary policy mix where it is considered not only inflation rates but also output gap to provide economic stability

References

  • Agur, I., & Demertzis, M. (2013). Leaning Against the Wind” and the Timing of Monetary Policy. IMF Working Paper(WP/13/86).
  • Aizenman, J., Hutchison, M., & Noy, I. (2011). Inflation Targeting and Real Exchange Rates in Emerging Markets. World Development, 39(5), 712-724.
  • Aklan, N., & Nargeleçekenler, M. (2008). Taylor Kuralı: Türkiye Üzerine Bir Değerlendirme. Ankara Üniversitesi SBF Dergisi, 63(2).
  • Albayrak, N., & Abdioğlu, Z. (2015). Geriye Ve İleriye Dönük Para Politikası Reaksiyon Fonksiyonlarının Tahmini: Taylor Kuralı. Süleyman Demirel Üniversitesi İİBF Dergisi, 20(4), 141-163.
  • Altavilla, C., & Landolfo, L. (2005). Do central banks act asymmetrically? Empirical evidence from the ECB and the Bank of England. Applied Economics, 37(5), 507 –
  • Ardor, H., & Varlık, H. (2014). İleriye Dönük Yeni Keynesyen Para Politikası Reaksiyon Fonksiyonunun Tahmini: Taylor Kuralı’nın, Mccallum Kuralı’nın, Taylor- Mccallum Melez Kuralı’nın Türkiye Ekonomisinde Geçerliliği. Ekonomik Yaklaşım, 24(89), 45-71.
  • Assenmacher-Wesche, K. (2016). Estimating Central
  • Banks’ preferences from a time-varying empirical reaction function. European Economic Review, 50, 1951
  • Ball, L. (1999). Policy Rules for Open Economies. J.
  • B. Taylor içinde, Monetary Policy Rules (s. 127 – 156). University of Chicago Press. Ball, L., & Tchaidze, R. (2002). The Fed and the New
  • Economy. American Economic Review, 92, 108–114. Bec, F., Salem, M. B., & Collard, F. (2002). Asymmetries in Monetary Policy Reaction Function Evidence for the U.S., French and German Central Banks. Studies in
  • Nonlinear Dynamics and Econometrics, 6(2). Berument, H., & Taşçı, H. (2003). Monetary Policy Rules in Practice Evidence from Turkey. International Journal of Finance & Economics.
  • Bilman, A., & Utkulu, U. (2010). Inflation And Output
  • Gaps Reconsidered: Assymetries And Nonlinear Phillips Curve Evidence For The Turkish Economy. Journal of Yasar University, 3155 - 3170.
  • Caporale, G., Catik, N., Helmi, M., Menla Ali, F., & Akdeniz, C. (tarih yok). Monetary Policy Rules in Emerging Countries: Is There an Augmented Nonlinear Taylor Rule? CESifo Working Paper Series(5965).
  • Carare, A., & Tchaidze, R. (2005). The Use and Abuse of
  • Taylor Rules: How Precisely Can We Estimate Them? IMF Working Paper(WP/05/148). Chen, Y., & Huo, Z. (2009). A Conjecture of Chinese
  • Monetary Policy Rule: Evidence from Survey Data, Markov Regime Switching, and Drifting Coefficients. Annals of Economics And Finance(10-1), 111–153. Christoper, C. (2006). Testing the Transparency Benefits of Inflation Targeting. IMF Working Paper. IMF.
  • Clarida, R., Gali, J., & Gertler, M. (1998). Monetary policy rules in practice: Some international evidence.
  • European Economic Review(46), 1033-1067.
  • Clarida, R., Gali, J., & Gertler, M. (2000). Monetary Policy
  • Rules and Macroeconomic Stability: Evidence and Some Theory. Quarterly Journal of Economics, 115, 147–180. Çevik, N., & Pazarlıoğlu, V. (2014). Türkiye’de Para
  • Politikasının Yapısı Ve Para Kuralı: 2013-1990 Dönemi.
  • Balkan Sosyal Bilimler Dergisi, 3(6). Demers, F., & Rodriguez, G. (2001). Estimation of the Taylor rule for Canada under multiple structural changes. Mimeo, University of Ottawa, Cahier de travail, E.
  • Demirbaş, E., & Kaya, M. (2012). Testing the Validity of
  • Taylor Principle for Turkey from a Different Perspective. AİBÜ Sosyal Bilimler Enstitüsü Dergisi, 12, 81-110. Erdoğan, S. (2013). Para Politikası. Kocaeli: Umuttepe.
  • Erdoğan, S., Yıldırım, D. Ç., & Güneş, H. (2010). Enflasyon
  • Hedeflemesi Stratejisi. Maliye Dergisi(159). Hutchisona, M., Senguptab, R., & Singha, N. (2013).
  • Dove or Hawk? Characterizing monetary policy regime switches in India. Emerging Markets Review, 16, 183–202. Islam, M., & Ali, M. (2012). Taylor Principle Supplements the Fisher Effect: Empirical Investigation under the US
  • Context. Economia. Seria Management(15), 189-203. Judd, J., & Rudebusch, G. (1998). Taylor’s rule and the fed: 1970–1997. (3), . Federal Reserve Bank of San
  • Francisco, Economic Review, 3, 3–16. Kayhan, S., Bayat, T., & Koçyiğit, A. (2013). Enflasyon
  • Hedeflemesi Rejiminde Öğrenme Süreci ve Asimetri: Markov Switching Yaklaşımı. Eskişehir Osman Gazi Üniveristesi İİBF Dergisi (8 (1)), 191‐212. Kim, C., & Nelson, C. (2006). Estimation of a Forward
  • Looking Monetary Policy. Journal of Monetary Economics(53), 1949–1966.
  • King, M. (1996). How should central banks reduce inflation? Conceptual issues. Federal Reserve Bank of Kansas City.
  • Kuzin, V. (2006). The Inflation Aversion of the Bundesbank: A State-Space Approach. Journal of
  • Economic Dynamics and Control(30), 1671–1686.
  • Lebe, F., & Bayat, T. (2011). Taylor Kuralı: Türkiye İçin Bir
  • Vektör Otoregresif Model Analizi. Ege Akademik Bakış, , 95-112. Lin, S., & Ye, H. (2007). Does inflation targeting really make a difference? Evaluating the treatment effect of inflation targeting in seven industrial countries. Journal of Monetary Economics, 54, 2521-2533.
  • Martin, C., & Milas, C. (2010). Financial Stability and Monetary Policy. Working Paper. Bath, U. K.: Department of Economics, University of Bath( Working Papers; 05/10).
  • Muscatelli, V., Tirelli, P., & Trecroci, C. (2002). Does institutional change really matter? Inflation targets,
  • Central Bank Reform and Interest Rate Policy in the OECD Countries. Manchester Schoo, 70(4), 487–527. Neumann, M., & von Hagen, J. (2002). Does inflation targeting matter? Zentrum für Europaische Integration Forschung, B01.
  • Omay, T., & Hasanov, M. (2010). Türkiye İçin Reksiyon
  • Fonksiyonunun Doğrusal Olmayan Modelle Tahmin Edilmesi. Çankaya University Journal of Humanities and Social Sciences, 7(2), 467-490. Onur, S. (2008). Türkiye Ekonomisi’nde Faiz Oranları–
  • Enflasyon İlişkisi Üzerine Bir Model Denemesi (1980– ). Journal of Qafquaz University, 24, 123-145.
  • Orphanides, A. (1997). Monetary Policy Rules Based on Real-Time Data. Board of Governors of the Federal Reserve System.
  • Orphanides, A. (2001). Monetary Policy Rules Based on Real-Time Data. American Economic Review, 91(4), 985.
  • Orphanides, A. (2002). Monetary Policy Rules and the Great Inflation. Board of Governors of the Federal Reserve System.
  • Orphanides, A. (2007). Taylor Rules. Board of Governors of the Federal Reserve System.
  • Orphanides, A., & Williams, C. (2003). Robust Monetary
  • Policy Rules with Unknown Natural Rates. Finance and Economics Discussion Paper Series, 2003–11.
  • Perruchoud, A. (2009). Estimating a Taylor Rule with
  • Markov Switching Regimes for Switzerland. Swiss Journal of Economics and Statistics (SJES) , 145(2), 187- Shi, Z. (2012). Empirical Analysis of Chinese Monetary
  • Policy Rules on Forward-looking Taylor Reaction Function. Journal of Convergence Information Technology(JCIT), 7(14). Sims, C., & Zha, T. (2006). “Were There Regime Switches in U.S. Monetary Policy? American Economic Review, (1), 54–81.
  • Taylor, J. (1993). Discretion Versus Policy Rules in
  • Practice. Carnegie-Rochester Conference Series on Public Policy, 39, s. 195–214. Taylor, M., & Davradakis, E. (2006). Interest Rate Setting and Inflation Targeting: Evidence of a Nonlinear Taylor
  • Rule for the United Kingdom. Studies in Nonlinear Dynamics & Econometrics, 10(4), -. Vilademir, K. (2006). The inflation aversion of the Bundesbank: A state space approach. Journal of
  • Economic Dynamics & Control, 30, 1671-1686.
  • Yapraklı, S. (2011). Türkiye’de Açık Ekonomi Para
  • Politikası Kuralının Geçerliliği: Sınır Testi Yaklaşımı. İş, Güç” Endüstri İlişkileri ve İnsan Kaynakları Dergis, 13(1), 142. Yay, G. (2006). Para Politikası Stratejileri ve Enflasyon
  • Hedeflemesi. İktisat Dergisi(470-471), 3-17. Yazgan, M., & Yılmazkuday, H. (2004). Monetary Policy
  • Rules in Practice: Evidence from Turkey and Israel. Applied Financial Economics, 17(1), 1-14. Zheng, T., Wang, X., & Guo, H. (2012). Estimating forward-looking rules for China’s Monetary Policy: A regime-switching perspective. China Economic Review, , 47-59.

Para Politikası Tercihleri İle İşsizlik Oranları Arasındaki İlişki

Year 2018, Volume: 18 Issue: 1, 31 - 46, 01.02.2018

Abstract

Bu çalışmada TCMB tarafından uygulanan para politikası tercihleri ile işsizlik oranları arasındaki ilişki 1999 ile 2014 dönemi için analiz edilmektedir. Çalışmamızda para politikası kuralı olarak Taylor kuralı dikkate alınmış ve Markov rejim değişim modeli kullanarak aktif ve pasif para politikasının uygulandığı dönemler belirlenmiştir. Ardından, eğilim skoru eşleştirme yöntemi kullanarak, para politikasının aktif olarak uygulandığı dönemlerde işsizlik oranlarının daha yüksek olduğu sonucuna varılmıştır. Bu sonuçlar, TCMB’nin ekonomik istikrarı sağlaması açısından para politikası tercihlerinde enflasyon oranının yanında çıktı açığını dikkate alan politika karmasını tercih etmesinin uygun olacağı anlamına gelmektedir

References

  • Agur, I., & Demertzis, M. (2013). Leaning Against the Wind” and the Timing of Monetary Policy. IMF Working Paper(WP/13/86).
  • Aizenman, J., Hutchison, M., & Noy, I. (2011). Inflation Targeting and Real Exchange Rates in Emerging Markets. World Development, 39(5), 712-724.
  • Aklan, N., & Nargeleçekenler, M. (2008). Taylor Kuralı: Türkiye Üzerine Bir Değerlendirme. Ankara Üniversitesi SBF Dergisi, 63(2).
  • Albayrak, N., & Abdioğlu, Z. (2015). Geriye Ve İleriye Dönük Para Politikası Reaksiyon Fonksiyonlarının Tahmini: Taylor Kuralı. Süleyman Demirel Üniversitesi İİBF Dergisi, 20(4), 141-163.
  • Altavilla, C., & Landolfo, L. (2005). Do central banks act asymmetrically? Empirical evidence from the ECB and the Bank of England. Applied Economics, 37(5), 507 –
  • Ardor, H., & Varlık, H. (2014). İleriye Dönük Yeni Keynesyen Para Politikası Reaksiyon Fonksiyonunun Tahmini: Taylor Kuralı’nın, Mccallum Kuralı’nın, Taylor- Mccallum Melez Kuralı’nın Türkiye Ekonomisinde Geçerliliği. Ekonomik Yaklaşım, 24(89), 45-71.
  • Assenmacher-Wesche, K. (2016). Estimating Central
  • Banks’ preferences from a time-varying empirical reaction function. European Economic Review, 50, 1951
  • Ball, L. (1999). Policy Rules for Open Economies. J.
  • B. Taylor içinde, Monetary Policy Rules (s. 127 – 156). University of Chicago Press. Ball, L., & Tchaidze, R. (2002). The Fed and the New
  • Economy. American Economic Review, 92, 108–114. Bec, F., Salem, M. B., & Collard, F. (2002). Asymmetries in Monetary Policy Reaction Function Evidence for the U.S., French and German Central Banks. Studies in
  • Nonlinear Dynamics and Econometrics, 6(2). Berument, H., & Taşçı, H. (2003). Monetary Policy Rules in Practice Evidence from Turkey. International Journal of Finance & Economics.
  • Bilman, A., & Utkulu, U. (2010). Inflation And Output
  • Gaps Reconsidered: Assymetries And Nonlinear Phillips Curve Evidence For The Turkish Economy. Journal of Yasar University, 3155 - 3170.
  • Caporale, G., Catik, N., Helmi, M., Menla Ali, F., & Akdeniz, C. (tarih yok). Monetary Policy Rules in Emerging Countries: Is There an Augmented Nonlinear Taylor Rule? CESifo Working Paper Series(5965).
  • Carare, A., & Tchaidze, R. (2005). The Use and Abuse of
  • Taylor Rules: How Precisely Can We Estimate Them? IMF Working Paper(WP/05/148). Chen, Y., & Huo, Z. (2009). A Conjecture of Chinese
  • Monetary Policy Rule: Evidence from Survey Data, Markov Regime Switching, and Drifting Coefficients. Annals of Economics And Finance(10-1), 111–153. Christoper, C. (2006). Testing the Transparency Benefits of Inflation Targeting. IMF Working Paper. IMF.
  • Clarida, R., Gali, J., & Gertler, M. (1998). Monetary policy rules in practice: Some international evidence.
  • European Economic Review(46), 1033-1067.
  • Clarida, R., Gali, J., & Gertler, M. (2000). Monetary Policy
  • Rules and Macroeconomic Stability: Evidence and Some Theory. Quarterly Journal of Economics, 115, 147–180. Çevik, N., & Pazarlıoğlu, V. (2014). Türkiye’de Para
  • Politikasının Yapısı Ve Para Kuralı: 2013-1990 Dönemi.
  • Balkan Sosyal Bilimler Dergisi, 3(6). Demers, F., & Rodriguez, G. (2001). Estimation of the Taylor rule for Canada under multiple structural changes. Mimeo, University of Ottawa, Cahier de travail, E.
  • Demirbaş, E., & Kaya, M. (2012). Testing the Validity of
  • Taylor Principle for Turkey from a Different Perspective. AİBÜ Sosyal Bilimler Enstitüsü Dergisi, 12, 81-110. Erdoğan, S. (2013). Para Politikası. Kocaeli: Umuttepe.
  • Erdoğan, S., Yıldırım, D. Ç., & Güneş, H. (2010). Enflasyon
  • Hedeflemesi Stratejisi. Maliye Dergisi(159). Hutchisona, M., Senguptab, R., & Singha, N. (2013).
  • Dove or Hawk? Characterizing monetary policy regime switches in India. Emerging Markets Review, 16, 183–202. Islam, M., & Ali, M. (2012). Taylor Principle Supplements the Fisher Effect: Empirical Investigation under the US
  • Context. Economia. Seria Management(15), 189-203. Judd, J., & Rudebusch, G. (1998). Taylor’s rule and the fed: 1970–1997. (3), . Federal Reserve Bank of San
  • Francisco, Economic Review, 3, 3–16. Kayhan, S., Bayat, T., & Koçyiğit, A. (2013). Enflasyon
  • Hedeflemesi Rejiminde Öğrenme Süreci ve Asimetri: Markov Switching Yaklaşımı. Eskişehir Osman Gazi Üniveristesi İİBF Dergisi (8 (1)), 191‐212. Kim, C., & Nelson, C. (2006). Estimation of a Forward
  • Looking Monetary Policy. Journal of Monetary Economics(53), 1949–1966.
  • King, M. (1996). How should central banks reduce inflation? Conceptual issues. Federal Reserve Bank of Kansas City.
  • Kuzin, V. (2006). The Inflation Aversion of the Bundesbank: A State-Space Approach. Journal of
  • Economic Dynamics and Control(30), 1671–1686.
  • Lebe, F., & Bayat, T. (2011). Taylor Kuralı: Türkiye İçin Bir
  • Vektör Otoregresif Model Analizi. Ege Akademik Bakış, , 95-112. Lin, S., & Ye, H. (2007). Does inflation targeting really make a difference? Evaluating the treatment effect of inflation targeting in seven industrial countries. Journal of Monetary Economics, 54, 2521-2533.
  • Martin, C., & Milas, C. (2010). Financial Stability and Monetary Policy. Working Paper. Bath, U. K.: Department of Economics, University of Bath( Working Papers; 05/10).
  • Muscatelli, V., Tirelli, P., & Trecroci, C. (2002). Does institutional change really matter? Inflation targets,
  • Central Bank Reform and Interest Rate Policy in the OECD Countries. Manchester Schoo, 70(4), 487–527. Neumann, M., & von Hagen, J. (2002). Does inflation targeting matter? Zentrum für Europaische Integration Forschung, B01.
  • Omay, T., & Hasanov, M. (2010). Türkiye İçin Reksiyon
  • Fonksiyonunun Doğrusal Olmayan Modelle Tahmin Edilmesi. Çankaya University Journal of Humanities and Social Sciences, 7(2), 467-490. Onur, S. (2008). Türkiye Ekonomisi’nde Faiz Oranları–
  • Enflasyon İlişkisi Üzerine Bir Model Denemesi (1980– ). Journal of Qafquaz University, 24, 123-145.
  • Orphanides, A. (1997). Monetary Policy Rules Based on Real-Time Data. Board of Governors of the Federal Reserve System.
  • Orphanides, A. (2001). Monetary Policy Rules Based on Real-Time Data. American Economic Review, 91(4), 985.
  • Orphanides, A. (2002). Monetary Policy Rules and the Great Inflation. Board of Governors of the Federal Reserve System.
  • Orphanides, A. (2007). Taylor Rules. Board of Governors of the Federal Reserve System.
  • Orphanides, A., & Williams, C. (2003). Robust Monetary
  • Policy Rules with Unknown Natural Rates. Finance and Economics Discussion Paper Series, 2003–11.
  • Perruchoud, A. (2009). Estimating a Taylor Rule with
  • Markov Switching Regimes for Switzerland. Swiss Journal of Economics and Statistics (SJES) , 145(2), 187- Shi, Z. (2012). Empirical Analysis of Chinese Monetary
  • Policy Rules on Forward-looking Taylor Reaction Function. Journal of Convergence Information Technology(JCIT), 7(14). Sims, C., & Zha, T. (2006). “Were There Regime Switches in U.S. Monetary Policy? American Economic Review, (1), 54–81.
  • Taylor, J. (1993). Discretion Versus Policy Rules in
  • Practice. Carnegie-Rochester Conference Series on Public Policy, 39, s. 195–214. Taylor, M., & Davradakis, E. (2006). Interest Rate Setting and Inflation Targeting: Evidence of a Nonlinear Taylor
  • Rule for the United Kingdom. Studies in Nonlinear Dynamics & Econometrics, 10(4), -. Vilademir, K. (2006). The inflation aversion of the Bundesbank: A state space approach. Journal of
  • Economic Dynamics & Control, 30, 1671-1686.
  • Yapraklı, S. (2011). Türkiye’de Açık Ekonomi Para
  • Politikası Kuralının Geçerliliği: Sınır Testi Yaklaşımı. İş, Güç” Endüstri İlişkileri ve İnsan Kaynakları Dergis, 13(1), 142. Yay, G. (2006). Para Politikası Stratejileri ve Enflasyon
  • Hedeflemesi. İktisat Dergisi(470-471), 3-17. Yazgan, M., & Yılmazkuday, H. (2004). Monetary Policy
  • Rules in Practice: Evidence from Turkey and Israel. Applied Financial Economics, 17(1), 1-14. Zheng, T., Wang, X., & Guo, H. (2012). Estimating forward-looking rules for China’s Monetary Policy: A regime-switching perspective. China Economic Review, , 47-59.
There are 61 citations in total.

Details

Other ID JA78CF27AJ
Journal Section Research Article
Authors

Emrah İsmail Çevik This is me

Durmuş Çağrı Yıldırım This is me

Publication Date February 1, 2018
Published in Issue Year 2018 Volume: 18 Issue: 1

Cite

APA Çevik, E. İ., & Yıldırım, D. Ç. (2018). The Relation between Monetary Policy Preferences and Unemployment Rates. Ege Academic Review, 18(1), 31-46.
AMA Çevik Eİ, Yıldırım DÇ. The Relation between Monetary Policy Preferences and Unemployment Rates. ear. February 2018;18(1):31-46.
Chicago Çevik, Emrah İsmail, and Durmuş Çağrı Yıldırım. “The Relation Between Monetary Policy Preferences and Unemployment Rates”. Ege Academic Review 18, no. 1 (February 2018): 31-46.
EndNote Çevik Eİ, Yıldırım DÇ (February 1, 2018) The Relation between Monetary Policy Preferences and Unemployment Rates. Ege Academic Review 18 1 31–46.
IEEE E. İ. Çevik and D. Ç. Yıldırım, “The Relation between Monetary Policy Preferences and Unemployment Rates”, ear, vol. 18, no. 1, pp. 31–46, 2018.
ISNAD Çevik, Emrah İsmail - Yıldırım, Durmuş Çağrı. “The Relation Between Monetary Policy Preferences and Unemployment Rates”. Ege Academic Review 18/1 (February 2018), 31-46.
JAMA Çevik Eİ, Yıldırım DÇ. The Relation between Monetary Policy Preferences and Unemployment Rates. ear. 2018;18:31–46.
MLA Çevik, Emrah İsmail and Durmuş Çağrı Yıldırım. “The Relation Between Monetary Policy Preferences and Unemployment Rates”. Ege Academic Review, vol. 18, no. 1, 2018, pp. 31-46.
Vancouver Çevik Eİ, Yıldırım DÇ. The Relation between Monetary Policy Preferences and Unemployment Rates. ear. 2018;18(1):31-46.