FACTORS AFFECTING PERFORMANCE CRITERIONS OF CENTRAL BANK OF THE REPUBLIC OF TURKEY: A PROBIT APPROACH

Abstract

This study investigates the determinants of performance criterion of Turkish central bank (CBRT) due to the bank’s deviations from its inflation and monetary goals during 1990-2011. For this purpose we establish a probit model to figure out macroeconomic determinants having effects on performance of the central bank. Empirical findings indicate that the factors having impact on performance of the central bank are real growth rate, budget deficit, broader money supply, inflation, nominal exchange rate and output gap. Econometric results of our study also suggest that CBRT has implemented a rule-like monetary policy, instead rule, during the period we investigated

Keywords

• Intermediate targets, Central Bank of Republic of Turkey, probit model

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