Inflation targeting: To financial stability from price stability

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Thesis Type: Postgraduate

Institution Of The Thesis: Uludağ Üniversitesi, Turkey

Approval Date: 2013

Thesis Language: Turkish

Student: HİLAL GÜNDOĞAN

Supervisor: HÜLYA AKAY

Abstract:

The inflation targeting policy in Turkey since 2002, up to the global financial crisis in 2008 was carried out without question. Classic inflation targeting that aims price stability with short-term interest rates, has emerged to be insufficient in 2008 global financial crisis, so a variety of policy changes have been made. TCMB has rewieved inflation targeting with monetary policy exit strategy that was declared in 2010, to increase the resilience of the economy against excessive credit expansion, rapid capital flows and vulnerabilities arising from the global markets. In this process, new policy instruments like the required reserve ratio, the interest rate corridor and reserve the option mechanism has been introduced with short-term interest rates. Also in this study between 2002:1-2012:9 inflation and variables that are thought to be related to the inflation were examined by SVAR model.