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The demand for money in Turkey and currency substitution
Titel:
The demand for money in Turkey and currency substitution
Auteur:
Bahmani-Oskooee, Mohsen Karacal, Muge
Verschenen in:
Applied economics letters
Paginering:
Jaargang 13 (2006) nr. 10 pagina's 635-642
Jaar:
2006-08-15
Inhoud:
Over the last three decades, the Turkish economy has experienced severe macro-shocks, among which depreciation of the Turkish lira is the most noticeable one. The Turkish lira (TL) has depreciated from 13 TL per US dollar in 1973 to more than 1.5 million TL per dollar today. It is expected that because of these shocks, some of the macro-relationships could suffer from structural instability which makes policy formulation and predictions difficult. This paper considers the demand for money in Turkey. To take account of currency substitution, the demand for money that includes the exchange rate in addition to income, interest rate and inflation rate is estimated. After incorporating the CUSUM and CUSUMSQ tests in bounds testing approach for cointegration, it is shown that in Turkey for a successful and effective monetary policy, the monetary authorities would rather concentrate on M1 because not only is it cointegrated with its determinants and it is stable, all four determinants belong to the cointegrating space.
Uitgever:
Routledge
Bronbestand:
Elektronische Wetenschappelijke Tijdschriften
Details van artikel 169 van 198 gevonden artikelen
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