Monetary Policy in The General Theory

Ekinci, Nazım Kadri
The theory of interest rate is central to Keynesian macroeconomics. This paper provides an interpretation of Keynes’ conventional theory of the interest rate. Accordingly, the interest rate can only be determined in the market, if expectations converge. The central bank is a market-maker, because of its capacity to manage expectations and to affect market outcomes. On the other hand, interest rate and asset prices determine the rate at which wealth is converted into income. This may be a crucial consideration when discussing the question of what monetary policy can do.


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Artam, Halil; Yıldırak, Şahap Kasırga; Department of Financial Mathematics (2006)
Interactions between macroeconomic fundamentals and term structure of interest rates be stronger according to the way of changes in structure of worldwide economy. Combined macro-finance analysis determines the joint dynamics of term structure of interest rates and macroeconomic fundamentals. This thesis provides analysis of two existing macro-finance models and an original one. Parameter estimations for these three macro-finance term structure models are done for monthly Turkish data by use of an efficient...
Monetary policy trilemma, inflation targeting and global financial crisis
Gulsen, Eda; Özmen, Erdal (Wiley, 2020-04-01)
We empirically investigate the validity of the monetary policy trilemma postulation for emerging market (EME) and advanced (AE) economies under different exchange rate and monetary policy regimes before and after the recent global financial crisis (GFC). Consistent with the dilemma proposition, domestic interest rates are determined by global financial conditions and the FED rate even under floating exchange rate regimes (ERR) in the long-run. The impact of the FED rates is higher in EME than AE and EME are...
Analysis of the monetary stance of Turkey between 2011 and 2018 with a new monetary conditions index: the roles of government bond yields and the exchange rate
Kaptan, Savaş; Gaygısız Lajunen, Esma; Department of Economics (2019)
Measuring the monetary policy stance of central banks is a much-debated issue in the literature. The changing economic dynamics over the time and different structures of economies have made impossible to use only short term interest rates, monetary aggregates or money market rates for analyzing the monetary stance. Accordingly, comprehensive monetary conditions indexes have been discovered and some central banks have started to use them as an operational target. In line with these developments, the main aim...
Optimal monetary policy and the timing of asset trade in open economies
Senay, Ozge; Sutherland, Alan (2007-05-01)
This paper analyses the timing of asset trade and its implications for monetary policy and welfare in open economies. Optimal policy is shown to differ significantly depending on whether asset trade takes place before or after policy decisions are made.
Macroeconomic and institutional determinants of current account deficits
Ozmen, E (Informa UK Limited, 2005-07-15)
This study empirically investigates the effects of institutional and macroeconomic policy variables on current account deficits (CAD). Based on cross-section data for a broad number of countries, the results suggest that better governance increases whilst 'original sin' decreases the ability of an economy to sustain CAD. Exchange rate flexibility and openness appear to put a discipline on CAD. Consistent with the equity home bias and Feldstein-Horioka puzzle, CAD decrease with country size. The net impacts ...
Citation Formats
N. K. Ekinci, “Monetary Policy in The General Theory,” ODTÜ Gelişme Dergisi, vol. 35, no. 1, pp. 121–132, 2008, Accessed: 00, 2020. [Online]. Available: