Credibility models of Central Bank independence and the case of Turkey

Date

1998

Author

Aybar, Sedat
Harris, Laurence

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In this paper, we argue that the standard models of central banking, which lie at the heart of the theory of monetary policy, omit important features of the modern world. We focus upon two absences: an international dimension that properly reflects 'globalisation' of finance; and endogeneity of the money supply. We summarize the existing paradigm of the theory of monetary policy, followed by a discussion of its limitations in a world marked by global financial markets, and then consider the relevance of the theories of endogenous money supply. Finally, we find empirical evidence supporting the structuralist version of money supply endogeneity for Turkey.

URI

https://hdl.handle.net/11511/110067

Collections

Department of Economics, Article