Channels of monetary transmission and Turkey case: The empirical analysis of VAR model

Monetary policy affects real economic variables through monetary transmission mechanisms. Hence, in literature current discussions about through which channels monetary policy affects economy is very important. These channels are official interest rate, asset prices, exchange rate, credit and expectations. The purpose of this thesis is to explore the efficiency of the monetary transmission mechanisms. In this context, in the first chapter, basic concepts in respect of monetary policy and theoretical approaches in current literature are discussed. In the second chapter, the process of monetary transmission mechanims are discussed. In the third chapter, efficiency of monetary transmission mechanisms in Turkey is analized using Vector autoregression (VAR) model. Emprical evidence shows that, monetary transmission mechanisms are consistent with current theories and effective in Turkey. Key Words: Monetary Transmission Mechanism, Monetary Policy, VAR Model