The credibility problem of the Central Bank of the Republic of Turkey: An empirical investigation
Yazarlar (1)
Prof. Dr. Ümit BULUT Kırşehir Ahi Evran Üniversitesi, Türkiye
| Makale Türü | Özgün Makale (Uluslararası alan indekslerindeki dergilerde yayınlanan tam makale) | ||
| Dergi Adı | Bulletin of Economic Theory and Analysis | ||
| Makale Dili | – | Basım Tarihi | 01-2020 |
| Cilt / Sayı / Sayfa | 5 / 2 / 1–15 | DOI | – |
| Makale Linki | https://ideas.repec.org/a/ris/betajl/0047.html | ||
| UAK Araştırma Alanları |
Para Politikası
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| Özet |
| Credibility gap that is defined as the difference between end-year inflation expectation and the inflation target is the main indicator to measure the credibility of a central bank that adopts the inflation targeting strategy. Within this scope, using monthly data spanning the period January 2006-April 2019, the goal of this paper is to examine whether the credibility gap of the Central Bank of the Republic of Turkey (CBRT) exhibits a mean-reverting or a random-walk behaviour. For this purpose, this paper employs unit root tests with different approximations in modelling structural breaks. The empirical findings indicate that the credibility gap of the CBRT has a unit root and demonstrates a random-walk behaviour. Put differently, the findings imply that the shocks affecting the credibility gap of the CBRT have persistence effects, meaning the CBRT has a credibility problem. |
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