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Evaluation of Endogeneity of Money Supply under Inflation Targeting Implementation in Turkey

Year 2018, Volume: 2 Issue: 3, 143 - 150, 30.09.2018
https://doi.org/10.25295/fsecon.2018.03.006

Abstract

This study aimed to question how successful the CBRT could be in the process of determining the money supply by acting in all these motivational conditions. To achieve this aim M3 as a proxy variable to the money supply, the banking sector loan volume as a proxy for the money demand has been dealt with. The study tested the causality relationship between variables using the Granger Causality Test and Error Correction Model.

According to the results of the Granger Causality Test, in the long run, the direction of causality between the money supply and credit expansion is straightforward from the money supply to the credit extension.

According to the findings of the Error Correction Model, there is a positive and statistically significant relationship between money supply and credit expansion in the short term. Credit expansion increases money supply.

References

  • Ahmad, N. F.Ahmed (2006). The Long-run and Short-run Endogeneity of Money Supply in Pakistan: An Empirical Investigation. SBP-Research Bulletin. Volume 2. Number 1. 2006.
  • CBRT (2013). Enflasyon ve Fiyat İstikrarı, Türkiye Cumhuriyet Merkez Bankası, http://www.tcmb.gov.tr/wps/wcm/connect/06084069-3751-44a3-ba98-fc5a65b908ba/Enflasyon_FiyatIstikrari.pdf?MOD=AJPERES&CACHEID=ROOTWORKSPACE-06084069-3751-44a3-ba98-fc5a65b908ba-m5lk8Dx)
  • Cepni, O., İ.E. Güney (2017). Endogeneity of Money Supply: Evidence from Turkey. Journal of Finance & Banking Studies 6(1), https://doi.org/10.20525/ijfbs.v6i1.680
  • Choi, W.G, S.Oh (2000). Endegeneous Money Supply and Money Demand. IMF working paper. No. 188. IMF Institute. November.
  • Dickey, D.A., W.A. Fuller (1979). Distribution of the Estimators for Autoregressive Time Series with a Unit Root. Journal of the American Statistical Association, 74.
  • Granger, C.W.J. (1969). Investigating Causal Relationship by Econometric Models and Cross Special Methods. Econometrica, 37, 3.
  • Nayan. S., N. Kadir, M. S. Abdullah, M. Ahmad (2013). Post Keynesian Endogeneity of Money Supply: Panel Evidence. Procedia Economics and Finance 7. International Conference on Economics and Business Research 2013 (ICEBR 2013)
  • Palley, T. (2008). Endogenous Money: Implications for the Money Supply Process, Interest Rates, and Macroeconomics. PERI Working Paper. No. 178. University of Massachusetts Amherst, Poltical Economy Research Instıtute.
Year 2018, Volume: 2 Issue: 3, 143 - 150, 30.09.2018
https://doi.org/10.25295/fsecon.2018.03.006

Abstract

References

  • Ahmad, N. F.Ahmed (2006). The Long-run and Short-run Endogeneity of Money Supply in Pakistan: An Empirical Investigation. SBP-Research Bulletin. Volume 2. Number 1. 2006.
  • CBRT (2013). Enflasyon ve Fiyat İstikrarı, Türkiye Cumhuriyet Merkez Bankası, http://www.tcmb.gov.tr/wps/wcm/connect/06084069-3751-44a3-ba98-fc5a65b908ba/Enflasyon_FiyatIstikrari.pdf?MOD=AJPERES&CACHEID=ROOTWORKSPACE-06084069-3751-44a3-ba98-fc5a65b908ba-m5lk8Dx)
  • Cepni, O., İ.E. Güney (2017). Endogeneity of Money Supply: Evidence from Turkey. Journal of Finance & Banking Studies 6(1), https://doi.org/10.20525/ijfbs.v6i1.680
  • Choi, W.G, S.Oh (2000). Endegeneous Money Supply and Money Demand. IMF working paper. No. 188. IMF Institute. November.
  • Dickey, D.A., W.A. Fuller (1979). Distribution of the Estimators for Autoregressive Time Series with a Unit Root. Journal of the American Statistical Association, 74.
  • Granger, C.W.J. (1969). Investigating Causal Relationship by Econometric Models and Cross Special Methods. Econometrica, 37, 3.
  • Nayan. S., N. Kadir, M. S. Abdullah, M. Ahmad (2013). Post Keynesian Endogeneity of Money Supply: Panel Evidence. Procedia Economics and Finance 7. International Conference on Economics and Business Research 2013 (ICEBR 2013)
  • Palley, T. (2008). Endogenous Money: Implications for the Money Supply Process, Interest Rates, and Macroeconomics. PERI Working Paper. No. 178. University of Massachusetts Amherst, Poltical Economy Research Instıtute.
There are 8 citations in total.

Details

Primary Language English
Subjects Business Administration
Journal Section Articles
Authors

Baki Demirel

Publication Date September 30, 2018
Published in Issue Year 2018 Volume: 2 Issue: 3

Cite

APA Demirel, B. (2018). Evaluation of Endogeneity of Money Supply under Inflation Targeting Implementation in Turkey. Fiscaoeconomia, 2(3), 143-150. https://doi.org/10.25295/fsecon.2018.03.006

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