Türkiye için reaksiyon fonksiyonunun doğrusal olmayan modelle tahmin edilmesi

In this paper we have estimated the monetary reaction function of the Central Bank of Republic of Turkey. The originality of the paper is that we have used smooth transition functions (STR) that allow for proper modelling of nonlinearities and asymmetries in the relationship between variables under consideration. The estimated models suggest that the backward-looking instead of foreward-looking models best characterise the CBRT’s reaction function, that is, the CBRT reacted to past inflation rates rather than to future rates. This finding is in conformity with earlier research. We have found that the main purpose of expansionary policy of the CBRT is to stabilise output whereas contractionary policies aimed only at reducing the inflation rate. The fact that the CBRT has disregarded inflation in conducting expansionary policy and focused only on output stabilisation may explain why the CBRT was not successful in fighting inflation. Besides, neither in expansionary policy regime nor in contractionary policy regime, real exchange rate is not targeted by CBRT. Moreover, budget deficit is targeted only in the contractionary policy regime.