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Do The Countries’ Monetary Policies Have Spatial Impact?

Arikan, Cengiz and Yalcin, Yeliz (2017): Do The Countries’ Monetary Policies Have Spatial Impact?

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Abstract

Nowadays, not land border but economic cooperation and borders determine the neighborhood and closeness by globalization. No doubt, any economic event happens in any country affects other partners more and less according to economic relationship in globalization process. The desire of measuring of this interaction make occur spatial econometrics. Initially, in spatial models take into account land borders. Subsequently, studies about spatial econometric models allow economic interactions and relationships. After the global economic crises in 2008 Central Banks have started to vary monetary policy tool to ensure economic and financial stability. It is estimated that which tool will be implemented by following the policies of the central banks in which they are closely related. The spatial effect of monetary policy can be not only geographical but also economic or social. Different spatial models have set up to examine whether any spatial effect on monetary policy. Unlike other studies in this study not only geographic weight matrix but also economic weight matrix have been used in the spatial models. Different weight matrix models results have been compared and construed. Our preliminary findings reveal that there is a spatial effect on monetary policy between OECD, EU and G-20 countries. And also, economic weight matrix effect is more than geographic weight matrix.

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