Interest rate, inflation, exchange rate and exchange relationship: The example of Turkey

In this study, it is aimed to examine the relations between ınterest rate, ınflation, exchange rate and stock exchange in the case of Turkey. In this direction, in the study, among the important macroeconomic indicators pointing to the level of economic development in Turkey; Relationships between Real Interest Rate, Monthly Inflation, Exchange Rate and BIST (Borsa Istanbul) data were analyzed with econometric analysis methods including time series. The research data includes the data set showing the monthly values of the variables between 01 January 2005 and 31 May 2023. As a result of the statistical analysis of the research data; it has been determined that LBIST, LDK, LENF and LFO variables have the necessary conditions for econometric analysis, the 'fixed and trended' regression model is suitable for examining the regression relationships between the variables, and, there are no autocorrelation problems in the models, however, there may be a problem of varying variance. In the long run, the stock market and exchange rate, interest rate and exchange rate, and exchange rate and inflation move together,the stock market and inflation, the stock market and the interest rate and the interest rate and inflation, on the other hand, do not come into balance in the long run and cannot act together, also, as a result of the analysis; in the long run; It has been determined that the stock market has a determining effect on the exchange rate and interest rate, and the exchange rate on the stock market and inflation. Again, the stock market and inflation affect the interest rate, and there is no interaction between the exchange rate and interest rate. In addition, as a result of 12-period impulse-response and variance decomposition analyzes, it was found that the variables had significant short- and long-term effects on each other, and other variables have a significant effect on the explanation of a variable at certain rates.