Does the Money Supply - Inflation Relationship Change over Time in Türkiye?
Chapter from the book:
Yılmaz,
E.
S.
(ed.)
2024.
Academic Research and Evaluations in the Field of Social Sciences-III.
Synopsis
The race for economic development affects countries' search for effective use of fiscal and monetary policies. At this point, the limits and effects of monetary policy bring along multidimensional debates. One of these debates is the direction and size of the interaction between money supply and inflation. In this study, the relationship between these two variables is analyzed for Türkiye for the period 2012M01-2024M07 using the rolling windows bootstrap causality test developed by Balcılar et al. (2010), which shows time-varying relationships. As a result, in the relationship between money supply and inflation, the Monetarist approach, which adopts the statement that “inflation is always and everywhere a monetary phenomenon”, can be valid only in certain dates, whereas the Structuralist approach, which indicates that inflation is fuelled by structural problems in the national economy, is more consistent. From this point of view, there may be the idea that Türkiye should focus on structural reforms and that the resources required for these structural reforms can be met by the Central Bank's monetary expansion, provided that it does not prejudice its independence and is rule-based.
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Copyright (c) 2024 Emrah Sıtkı Yılmaz; Şahin Çaylı, Ebru Açık Turğuter, Ebrar Elveren, Selahattin Taylan, Salih Köseoğlu, Mehmet Yıldırım, Ayşe Yaşar Ümütlü, Turgay Toksoy, Özlem Balaban, Fazilet Nohut, Ahmet Küçük, Umut Turgut Yıldırım, Osman Ağır, Halil İbrahim Ada, Ezgi Tokdil, Erdoğan Keleş, Zeynep İskefiyeli, Fikrettin Yavuz, Berna İleri, Tuğba Konuk, Murat Nazlı, Bahar Moazami, Fatima Alwash, Mahmut Uçaktürk