The Effects of Additional Monetary Tightening on Exchange Rates

Ermişoğlu, Ergun and Akçelik, Yasin and Oduncu, Arif and Taşkın, Temel (2013): The Effects of Additional Monetary Tightening on Exchange Rates.

Abstract

Since the global financial crisis, Central Banks have used various policy tools to sustain financial stability besides price stability. Additional Monetary Tightening is one of these tools that the Central Bank of the Republic of Turkey used in 2011-2012. The effects of this tool on the exchange rate are the main theme of this paper. Our analysis indicates that additional monetary tightening has a significant role in reducing volatility in the exchange rate. It is also shown that during the days of additional tightening Turkish Lira appreciated against the emerging market currencies.

• Item Type: MPRA Paper
• Language: English
• Keywords: Additional Monetary Tightening, Turkish Lira, Exchange Rates, Central Bank of the Republic of Turkey’s New Policy Mix, GARCH
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C12 - Hypothesis Testing: General; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C58 - Financial Econometrics; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies

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