Activities of the monetary transmission mechanism: In the case of Turkey

January 24, 1980 decision by Turkey abandoned the traditional banking and financial policies in line with European and world banking and financial institutions and competition has gained confidence with the Ozal. TCMB has come to the forefront with its more active and increasing responsibility. The task of the TCMB is to support price stability and to support the banking sector and to comply with the fiscal policies of the government. The aim of this thesis is to examine the effects of interest rate, exchange rate, money supply and asset prices on the level and distribution of industry and gsm, which are the most effective tools of monetary policy. With the change in interest rates, how the shares of industry, services and agricultural sector have changed is shown with graphs. Examining Turkey and world literature on the monetary transmission mechanism conclusions were transferred.It has been shown why the results obtained by econometric analysis do not or do not meet the expectations.In the period covered, there was a similar relationship between the output level of money (M), income and inflation. It is the same directional relationship between the increase in money and the exchange that does not match the theory. This sign is positive while the value of the currency should be reversed. Currency, these variables change in the foreign currency into Turkey from informal way entry and can be explained by cyclical changes. The SVAR analysis was used to estimate the residual values of these interest rates, exchange rates, industrial production, national income, money supply and inflation. According to the results of this estimation, a significant relationship was found between a number of variables. In SVAR analysis effect response functions were made and necessary comments were made. Keywords: Money politics,VAR and Vecm, effect-reaction fonctions, error correction model, granger causality test, co-integrating vectors