The application and effectiveness of monetary policy in the economic crisis: The case study, Turkey

Except the crisis happened in industrialized countries, The developing countries in the year of 80s and 90s the Banking and Financial Systems was happened. The Central Banks has made right decisions to apply an effective Monetary policy by directly intervening in Monetary policy. Sometimes wrong decisions which was made by government led the crisis having bigger impacts. The aim of this study by presenting the general framework of monetary policy is to examine the effectiveness of monetary policy. In thiscontext, first, the effectiveness of monetary policy in the economic crisis and the crisis after the year 1990 is discussed generally. The macroeconomic policies implemented in Turkey by refering to the central bank's structures is summarized. The effectiveness of monetary policy has been examined through The Mundell-Fleming Model. By means of economic indicators, the implemented monetary policies within the period of 1990 and 2001 in Turkey concluded with a failure of its effectiveness due to the adverse effect of fiscalpolicy implementation. In the economies implementing both the monetary policy and fiscal policy has been agreed as a conclusion that the macroeconomic policies will be effective. KeyWords: Central Banks, Economic Crisis, Monetary Policy, Mundell-Fleming Model.