The Conduct of Monetary Policy in Turkey in the Pre- and Post-crisis Period of 2001 in Comparative Perspective: a Case for Central Bank Independence

We document the role of independence for Central Bank of Republic of Turkey (CBRT) as it matters to successful implementation of monetary policy. We compare the implementation of monetary policy pre- and post-crisis periods within an empirical framework which allows us to measure the role of independence quantitatively. We estimate a Taylor rule with time varying coefficients by employing a dual extended Kalman filter. We find that the coefficient of inflation gap has increased substantially since CBRT gained de-juro independence.Taylor Rule, Kalman Filter, Monetary Policy

Estimating Central Bank Behavior in Emerging Markets: The Case of Turkey

Design of policy rules for an an emerging market central bank (EMCB) operating in an inflation-targeting framework presents additional challenges beyond those for describing the behavior of a central bank in a developed economy. Even though an inflation-targeting regime entails abolishing the exchange rate target in favor of an inflation target, it is more difficult for an EMBC to ignore movements in exchange rates given the relatively shallow depth of financial markets and the the high degree of dollarization. Additionally the EMCB may be forced to change the pursued exchange rate regime following a capital account reversal so that linear Taylor rules may be inadequate for describing EMCB reactions. We develop an empirical framework that addresses these issues and propose a new methodology to estimate unobserved variables such as expected inflation and potential output within the rule. Specifically, we employ a structural, nonlinear Kalman filter algorithm to estimate time-dependent parameters and unobserved variables, and we experiment with various exchange rate mechanisms that can be employed by an EMCB. This approach allows us to track any changes in EMCB behavior - including regime shifts - following a switch to inflation targeting. Using post-2001 data from Turkey, which is a fairly dollarized small open economy, we document that the Central Bank of Turkey has given relatively more importance to the inflation gap than to the output gap or to exchange rates, but not until some time after it had switched to an inflation-targeting framework.Dual Extended Kalman Filter, Taylor Rule, inflation targeting, emerging markets

Foreign policy and public attitudes in Turkey : an application of the hierarchical model of attitude constraint

Previous studies on Turkish public attitudes on foreign policy have mostly been of descriptive nature and failed to test a model against the data at hand. Explaining foreign policy attitude formation with a model both sheds light on to the role of public attitudes in international negotiations and renders predictive power for identifying public attitudes in future international incidents. Using information processing theory, this thesis applies the hierarchical model of attitude constraint to see whether abstracter beliefs and values of an individual determine her attitudes in foreign policy realm, a realm which is especially complex and ambiguous to make sense out of with everyday stimuli one is exposed to. Simple ordinary least squares and binary logistic regressions were run on a data obtained from a nationwide survey that included both urban and rural areas. The components of the model were derived from previous literature that examined the fault lines of Turkish society.Findings suggest that expectation in socioeconomic status change is a major determinant in foreign policy attitude formation. While statistically significant, religiosity plays a relatively minor role in the model. Contrary to the expectations, group identity also plays a trivial role as a constraining factor in attitude formation - only an ideologically polarized, agitated small Kurdish group consistently stand out in its foreign policy attitudes. Trust in third party actors (i.e. the European Union) prove to constrain attitudes in specific foreign policies pursued by Turkey

Savaşın ve barışın nedenleri: siyasi kurumlar, demokrasi ve ötesi

Savaş, insanlığın gördüğü en yıkıcı süreçlerden biridir. Yine de askeri güç kullanımı devletler tarafından bilinçli yapılan bir politika seçimidir. Genel olarak çatışma ve barış çalışmaları altında yapılan çalışmalar, ülkeler arası güç dengesi ve sistemde kutuplaşmayı barışın reçetesi olarak sunan realist ve neorealist yaklaşımların geçerliliğini sorgulamaktadır. Savaşın nedenlerini sistemli şekilde ortaya çıkarmak için ülkelerin iç yapılarının anlaşılması gerektiğini savunan bu çalışmalar güçlü bir yazın geliştirdiler. İlk sistemli temelini demokratik barış teorisi üzerinden oluşturan bu yaklaşım, tüm ülke ve liderlerin, tarihsel miras, kültür, din ve benzeri niteliklerden bağımsız olarak askeri güç kullanımını, diğer dış politika gereçleri yerine rahatça kullanmayı seçebileceğini savlar. Ancak, bir ülkenin kurumlarının keyfi güç kullanımına karşı oluşturduğu mekanizmalar ve kurumsal şeffaflık hem olası savaşları önlemekte hem de ülkenin gerçekten ciddi olduğu bir konuda istediğini savaşmadan elde etmesini sağlamaktadır

Enerji güvenliği

21. yüzyılda şahit olduğumuz toplumsal ve teknolojik gelişmeler enerji güvenliği tesisini ülkeler için çok boyutlu bir sorun haline getirmiştir. Bir taraftan üretim,tedarik ve fiyatlamada tahmin edilebilirlik olguları enerji güvenliğinin temelini oluşturmaya devam etmektedir. Diğer taraftan, küreselleşmenin gündeme getirdiği uluslararası terörizm, siber saldırılar, ulusdevleti tehdit eden yerel ve bölgesel oluşumlar gibi konular, ülkeleri enerji güvenlikleri konusunda askeriekonomik-diplomasi üçgeninin ötesinde politikalar üretmeye zorlamaktadır. Asya Pasifik Enerji Araştırmaları Merkezi’nin 4A yaklaşımı, enerji güvenliğinin evrildiği çok boyutlu ve çok anlamlı doğasını çözümleyebilme yolunda faydalı bir çerçeve sunmaktadır. Buna göre, enerji güvenliğinin mevcudiyet (availability), erişilebilirlik (accessibility), ekonomiklik (affordability) ve sosyal kabul edilebilirlik (acceptability) boyutlarına dikkat çekilmekte, bu boyutların farklı aktörler için nasıl farklı anlamlara gelebildiklerini net bir şekilde örneklenmektedir. Yenilenebilir enerjinin getirdiği yenilik ve sorunlar da 4A çerçevesinde etkili bir şekilde değerlendirilebilmektedir

Unintended Transnational Effects of Sanctions: A Global Vector Autoregression Simulation

The debate on unintended consequences of sanctions, such as their adverse effects on human rights, public health, or the economy beyond intended sectors in the target state, has become increasingly popular over the last couple of decades. Interestingly, however, this debate has mostly overlooked the transnational aspects of these unintended consequences. This study examines one such aspect, namely the economic spillover of sanctions to neighboring countries. Our global vector autoregression oil and inventory model (GOVAR) simulations on Indonesia, a medium-level oil producer, indicate sanctions may spill over to its neighbors’ domestic economy. The risk and nature of spillover varies with respect to the type of sanctions employed, timing of sanctions, and the macroeconomic indicator in the neighboring state in question. Equity markets appear especially susceptible to a contagion effect. Understanding how a sanction spills over to neighboring states can help sender states design sanctions that minimize regional disruptions.</p

Iran sanctions: implications for the oil market

United States (U.S.) Iran energy sanction waivers expired May 2, 2019. The waivers permitted eight economies (China, Greece, India, Italy, Japan, South Korea, Taiwan, and Turkey) to temporarily continue buying oil from Iran. Based on KAPSARC modeling of the political decision-making process, this Instant Insight – the first such KAPSARC publication – finds that the international community, and indeed some of the waiver economies, will at best partially comply with reinstated sanctions. China, India and Turkey are particularly unlikely to comply with U.S. sanctions and will maintain much of their current oil trade with Iran, the modeling shows. The paper also simulates the likely impact on the global oil price of ending the waivers in four scenarios which show: i) no oil price rise if the sanctions don’t work at all, ii) an oil price rise of up to 12% by Q2 2020 if Iranian oil exports drop by an average 42%, iii) a 30%-plus price increase if the sanctions are 100% effective, and iv) no significant price change if Saudi Arabia offsets reduced Iranian crude oil exports by increasing its output and exports

The impact of global trade disruptions on world oil markets

Our model simulations suggest three critical insights: 1. Despite a significant fall in global GDP, the price of Brent crude will fall only slightly. 2. Almost all oil producing countries see a significant cut to their oil production relative to their baseline, while the U.S. sees an increase. Saudi Arabia emerges as the swing producer, absorbing a significant portion of this production cut. 3. The trade war will lead to backwardation in the price of Brent, which is expected to fall slightly in the year following a negative shock to global GDP due to global trade disruptions, falling further in the second year of the disruption (2020). In anticipation of this, a. oil exporters will release a larger part of their inventories onto the market in early 2020,followed by a smaller amount in early 2021; b. oil importers will increase their oil purchases in 2021, capitalizing on lower oil prices

Afghanistan in transition: institution and security nexus

After more than a decade of NATO-led intervention, Afghanistan is now transitioning into a fully functioning state. Two main challenges lie ahead as NATO plans to withdraw its forces and turn security over to the Afghan government. The short-term challenge relates to guaranteeing an effective and efficient turnover of power to Afghan authorities. In the longer term, NATO wants to ensure a healthy consolidation of Afghan state institutions. The way in which NATO manages this turnover as well as its role in the transition’s aftermath will have immense implications on the evolution of the Afghan state. As such, the transatlantic alliance, as well as civil and military policy makers, are at a critical juncture in its Afghanistan endeavor. The transition from a stage of acute conflict to that of institutional consolidation will bring about new challenges for Afghanistan across a spectrum of policy issues. In this transition stage, Afghanistan needs not reinvent the wheel in many of the challenges it will face. Istanbul Policy Center in cooperation with USAK and the financial support of NATO Public Diplomacy Division convened a series of panels to further the debate on specific policy challenges facing NATO and the Afghan government during this transition. More specifically, these panels hosted experts in specific fields that we deemed may be critical to a healthy consolidation of the Afghan state. We chose the panel topics to address concrete policy challenges that stand at the security-economics-society nexus and that can lend themselves to specific policy proposals

The Conduct of Monetary Policy in Turkey in the Pre- and Post-crisis Period of 2001 in Comparative Perspective: a Case for Central Bank Independence

We document the role of independence for Central Bank of Republic of Turkey (CBRT) as it matters to successful implementation of monetary policy. We compare the implementation of monetary policy pre- and post-crisis periods within an empirical framework which allows us to measure the role of independence quantitatively. We estimate a Taylor rule with time varying coefficients by employing a dual extended Kalman filter. We find that the coefficient of inflation gap has increased substantially since CBRT gained de-juro independence