EMPIRICAL FINDINGS CONCERNING THE PROCESSES OF MONETARY TRANSFER MECHANISMS IN TURKEY (1998-2015)

Abstract

Monetary transfer mechanisms express the effects of monetary policy decisions on the real and monetary variables in terms of through which channels and during which lags they are occurring. In this study, it was attempted to determine through which monetary transfer mechanism channel or channels the interaction between the monetary policy in Turkey and the real economy realizes. The variables used in the analysis and the order of these variables are assessed by taking the financial theory into consideration. For this end, by using the periodical data of 1998:Q1:-2015Q1, whether M1 money supply, interest rate, currency rate, stock prices, and bank credits are influential on industrial production and inflation in the short term was analysed. Starting from this, the stationarity data of the variables are tested through Advanced Dickey-Fuller (ADF) test. According to the results of the ADF test, it was determined that the variables become stationary when their first differences (1) are taken. In the second phase, the cause-effect analysis was carried out by making use of the VAR method. According to the results of the VAR analysis, money supply, interest rate, currency rate, stock prices, and bank credits are influential on industrial production index and on inflation. Therefore, it was concluded that all the channels of 1998:Q1:2015Q1 monetary transfer mechanism in Turkey are processed in the short-term.