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Öz

In this paper we investigated whether the Central bank of Turkey (CBRT) followed a strict Taylor Rule during 2003-2012. We found that it has not, due to different reasons in different periods: inflation targeting policy before the global crisis and trying to achieve the joint targets of price and financial stabilities after the crisis. Furthermore we tried to formulate a modified Taylor Rule which fitted the actual courseof nominal interest rate during 2010-2012 as closely as possible. In contrast with our estimated modified Taylor Rule which indicated that the nominal interest rates were increased only by 0.49% in practice during 2010-2012, the estimated standard Taylor Rule suggested an increase of the nominal interest rates by 1.23% during 2008-2010 for each percentage change in the inflationary gap. Hence, this displayed a loose monetary policy with respect to the strict Taylor Rule. As a matter of fact, in January 2014, CBRT had to increase its policy interest rate down from 4 % up to 10 %

Anahtar Kelimeler

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A MODIFIED TAYLOR RULE FOR THE CENTRAL BANK OF TURKEY* (CBRT): 2003-2012

Öz

In this paper we investigated whether the Central bank of Turkey (CBRT) followed a strict Taylor Rule during 2003-2012. We found that it has not, due to different reasons in different periods: inflation targeting policy before the global crisis and trying to achieve the joint targets of price and financial stabilities after the crisis. Furthermore we tried to formulate a modified Taylor Rule which fitted the actual courseof nominal interest rate during 2010-2012 as closely as possible. In contrast with our estimated modified Taylor Rule which indicated that the nominal interest rates were increased only by 0.49% in practice during 2010-2012, the estimated standard Taylor Rule suggested an increase of the nominal interest rates by 1.23% during 2008-2010 for each percentage change in the inflationary gap. Hence, this displayed a loose monetary policy with respect to the strict Taylor Rule. As a matter of fact, in January 2014, CBRT had to increase its policy interest rate down from 4 % up to 10 %. Key Words: Taylor Rule, Reaction Function Of Central Bank, Modified Taylor Rule, Turkey

Anahtar Kelimeler

• Taylor Kuralı, Merkez Bankası Tepki Fonksiyonu

Kaynakça

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