Nominal GNP: An Anchor For Monetary Policy in Turkey?

Date

1997

Author

Domaç, İlker

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This paper provides an overview of a recent proposal of nominal GNP as an anchor for monetary policy and investigates the feasibility of its adoption in Turkey. The empirical framework employed evaluates the feasibility of the adoption of this policy on three grounds. First, whether the central bank can control the instrument, namely the monetary base. Second, whether there exists a stable long-run relationship between nominal GNP and the monetary base. Third, whether the monetary base is a useful predictor of nominal GNP. Although the empirical results lend support to its adoption, a successful implementation of this policy hinges crucially on the existence of a legally and operationally independent central bank.

URI

https://hdl.handle.net/11511/112303

Collections

Department of Economics, Article