Asymmetric effects of monetary policy shock in Turkey

Monetary policy is the total of the decisions made by the central bank in order to reach the ultimate goals by affecting the amount of money, the cost and expectations of firms and households. It is very important for the decisions of the central bank to know how and in what way the effect of monetary policy practices on output and price are realized. Therefore, considering the asymmetrical impacts in creating monetary policies, it is deemed necessary for the success of the monetary policy. The asymmetric effects of monetary policy are not a new concept in economic literature. They imply that changes in money supply have different effects than expected in the economy. With the 1929 World Economic Depression, the existence of an asymmetric effect was observed with the failure of the symmetrical effects of the monetary policies implemented. In this study, the asymmetric effects of monetary policy shocks in Turkey were examined. For this purpose, using monthly data for the years 2005-2017 asymmetric causality of monetary policy shocks in Turkey were analyzed. Hacker-Hatemi-J (2012) and Hatemi-J (2012) causality analysis were performed for positive and negative monetary policy shocks by using money stock, consumer price index and industrial production index variables. The findings show that there is no causality relationship between the variables for both positive and negative shocks. Key Words: Monetary Policy, Asymmetric Impact, Monetary Policy Shocks,