Inflation targeting: Country experiences and applicability for Turkey

IV ABSTRACT INFLATION TARGETING: COUNTRY EXPERIENCES AND APPLICABILITY FOR TURKEY Harun UÇAK Master Thesis, Department of Economics Supervisor: Phd. Mahir FİSUNO?LU September 2003, 119 pages As a monetary policy, inflation targeting has firstly been implemented by New Zeland Central Bank in 1990 and since then has been adopted in many countries. Inflation targeting had put on the agenda at the end of the 1990' s in Turkey, and has stil been under discussion whether it is appliciable as a monetary policy. In the first chapter of this resarch, the theoritical framework of inflation targeting, its preconditions and strategical features are studied. In the second chapter, the implementiation of inflation targeting is examined by analyzing the experiences of New Zealand and Israel. In the last section, inflation targeting is questioned whether it is an appropriate monetary poolicy for Turkey. As a first step toward inflation targeting, Central Bank of Turkey has been given legal independency by law. In addition, appropriate public finance policy should be complementary to inflation targeting. Key Words: Inflation Targeting, Monetary Policy Targets, Central Bank Independence, Independence of TCMB, Inflation in Turkey