The effects of fed monetary policies on Türkiye: a study on COVID-19 pandemic and the Ukraine - Russia war

Following the COVID-19 pandemic, rising energy prices and disruptions in global supply chains led to increased inflation, prompting the Federal Reserve (FED) to take policy actions that affected economies worldwide. These decisions also had a significant impact on the Turkish economy. In an effort to mitigate these effects, Türkiye implemented several precautionary measures, which in turn had their own economic consequences. Subsequently, the unexpected outbreak of the Russia-Ukraine war further intensified global financial instability. The war exacerbated inflation and supply chain issues on an international scale, affecting economies worldwide. In response, countries introduced various measures to minimize the negative impacts, which not only influenced their own economies but also had spillover effects on others. Among the affected countries was Türkiye. This study examines the impacts on the Turkish economy using the Time-Varying Parameter Vector Autoregression (TVP-VAR) model. The time-based TVP-VAR model enables a detailed analysis of the complex, nonlinear, and time-dependent relationships among variables, thereby enhancing the theoretical and empirical contributions of the study. In conclusion, the dynamics of the global economy inevitably affect developing countries like Türkiye. However, the degree of this impact is directly related to internal dynamics, policy responses, and structural resilience.