The effects of non-traditional monetary policies implemented by the Central Bank of the Republic of Turkey on inflation and growth: Analysis of the 2008-2020 period by time series method

Crises have an important place in the history of economy. These crises help the development of existing theories and reveal the inadequacies in the theories. This was the case with the financial crisis that started in 2008 and spread to other countries in the world. After the crisis, traditional monetary policies started to be implemented, but when these policies did not give the desired results, non-traditional monetary policies were started to be implemented. Major policies include Forward-Looking Guidance, Quantitative Expansion, Zero Lower Limit or Negative interest rate policy and Interest Rate Corridor implementation. These policies, led by the FED, ECB and BOE, also affected other countries. The CBRT has resorted to unconventional monetary policy practices in order to prevent the negative reflections of the policies implemented by the central banks of developed countries. In the study, the tools used by the central bank in order to monitor the results of these policies implemented by the CBRT were examined one by one. It has been observed that the CBRT uses open market operations to stabilize policy rates. While the desired targets were achieved at the beginning of our review period, interest rates increased at the end of the period. The central bank has also actively used reserve requirement ratios. For example, the practice of paying interest on required reserves was suspended in 2010, but interest was re-paid in 2014. The Central Bank has used the interest rate corridor and the reserve option mechanism together. Using the wide corridor system, the central bank also actively used the reserve option mechanism. Ask in the application part of the study; The increase in the monetary base caused by the policies implemented between 2008-2020 has been tested with the time series on inflation and growth. With the help of the established SVAR model, impulse response analysis was carried out and the results obtained confirm the structuralist view, which claims that there is a bidirectional effect between prices and money supply. As a result of examining the relationship between consumer prices and producer prices, it has been seen that the increase in consumer prices has a negative and then a positive effect on producer prices and creates a two-way interaction. In the variance decomposition, it was determined that the most important change in the monetary base was the producer prices, and when consumer prices and producer prices were compared, it was concluded that consumer prices were more effective and demand inflation was dominant. Keywords: Financial Crisis, Monetary Policy, Central Bank, Inflation, Growth