Validity of Taylor's rule for Turkey: An empirical study

The aim of this paper is to propose an estimate of the reaction function of Turkey's monetary policy for the periods from January 2005 to January 2020. In this perspective, a VAR (Vector Autoregressive) model is set up. The VAR model was estimated using Stata software. In this study, the Taylor rule is extended by implicating the industrial production index and the monetary aggregate M2 into policy reaction function. By doing so, the Taylor rule is investigated for the Turkish economy, and the validity of the rule is tested. The results of the ADF test show for all the observed variables that the null hypothesis of a unit root is rejected. In other words, the condition of stationarity seems to be satisfied. In the short term, it seems that a change in the behavior of the variable M2 has an impact of 1% on the level of the current inflation rate as well as the current real interest rate. For the period studied, the results of the VAR modeling indicate that Taylor's rule is partly true for the short term but that it is not for the long term. The choice of the period studied seems to be the main reason for the non-cointegration between the inflation rate and the bank rediscount rate. © 2021 The Authors

Validity of Taylor's rule for Turkey

The aim of this paper is to propose an estimate of the reaction function of Turkey's monetary policy for the periods from January 2005 to January 2020. In this perspective, a VAR (Vector Autoregressive) model is set up. The VAR model was estimated using Stata software. In this study, the Taylor rule is extended by implicating the industrial production index and the monetary aggregate M2 into policy reaction function. By doing so, the Taylor rule is investigated for the Turkish economy, and the validity of the rule is tested. The results of the ADF test show for all the observed variables that the null hypothesis of a unit root is rejected. In other words, the condition of stationarity seems to be satisfied. In the short term, it seems that a change in the behavior of the variable M2 has an impact of 1% on the level of the current inflation rate as well as the current real interest rate. For the period studied, the results of the VAR modeling indicate that Taylor's rule is partly true for the short term but that it is not for the long term. The choice of the period studied seems to be the main reason for the non-cointegration between the inflation rate and the bank rediscount rate

Para politikası ve faiz kararları arasındaki ilişki : teorik ve uygulamalı yaklaşım

Para politikası, belli ekonomik amaçları gerçekleştirmek için para ve kredi koşullarının Merkez Bankası tarafından kontrol edilmek üzere bilerek ve isteyerek yapılan faaliyetler olarak tanımlanmaktadır. Bretton Woods sisteminin yıkıldığı 1970’li yılların basından günümüze kadar merkez bankacılar ve iktisatçılar arasında, para politikasının uzun dönemde nihai ve öncelikli amacının fiyat istikrarı olduğu hususunda belirli bir uzlaşma olduğu gözlenmektedir. Fiyat istikrarının para politikası amaçları arasında üst sıralara yükselmesi, ekonomide yaşanan fiyat istikrarı sorununun meydana getirdiği ekonomik tahribattan kaynaklanmaktadır. Merkez Bankaları para politikaları amaçlarına ulaşmaya çalışırken faiz oranlarından büyük ölçüde yararlanmaktadırlar. Faiz oranlarında görülen dalgalanmalar, belirsizlik ortamına yol açarak gelecekle ilgili sağlıklı planların yapılmasını güçleştirmektedir. 1980 yılından sonraları ise Türkiye’de birçok kriz yaşanmış ve bu krizler ekonomide ciddi tahribatlara yol açmıştır. Yaşanılan krizler çoğunlukla IMF’den alınan dış yardımlar ve çeşitli istikrar programlarıyla aşılmaya çalışılmıştır. İstikrar programlarında ve Türkiye Cumhuriyeti Merkez Bankası’nın para politikası stratejilerinde faiz oranlarının istikrarına büyük ölçüde önem verilmiştir. Özellikle 2006 yılından itibaren açık enflasyon hedeflemesine geçilmiş olup kısa vadeli faiz oranları temel politika belirleyicilerinden biri olmuştur. Bu çalışmada para politikası faiz reaksiyonu çerçevesinde T.C.M.B’nin faiz oranlarını para politikası aracı olarak kullanılabilirliğinin etkinliği incelenmiştir. Yapılan VAR analizi, Etki Tepki Fonksiyonu ve Varyans Ayrıştırması analizleri sonucunda kısa vadeli nominal faiz oranlarının para politikası aracı olarak kullanılabileceğine karar verilmiştir. Ayrıca bu karar da enflasyon açığının üretim açığına göre daha etkili olduğu sonucuna ulaşılmıştır. Anahtar Kelimeler: Para Politikası, Para Politikası Araçları, Para Politikası Faiz Reaksiyonu, VAR Analizi ABSTRACT Monetary policy is defined as knowingly and willingly realized activities to achieve certain economic objectives of monetary and credit conditions, which controlled by the Central Bank. It was observed that, there was a certain compromise among central bankers and economists that the ultimate and primary goal of monetary policy in the long run was price stability from the beginning of the 1970s that the Bretton Woods system collapsed to the present. Rising in a high position of price stability among the objectives of monetary policy is due to economic destruction, which caused by price stability problems. Central Bank monetary policies greatly benefit from interest rates, while striving to achieve their objectives. Fluctuations in interest rates make it difficult to realize favorable plans as leading uncertainty. Turkey experienced many crises after 1980 and these crises have led to serious destructions in the economy. It was tried to overcome mostly from the IMF stabilization programs and foreign aids in these crises. A great attention was paid to stability of interest rates in stabilization programs and monetary policy strategy of Central Bank of the Republic of Turkey. Explicit inflation targeting has been adopted especially since 2006, and short-term interest rates have been one of the main policy determinants. In this study, the effectiveness of usability of interest rates as the tools of monetary policy by Central Bank of the Republic of Turkey was investigated within monetary policy interest reaction. As a result of VAR Analysis, Impulse - Response Function and Variance Decomposition Analysis, it has been decided that short-term nominal interest rates could be used as the tools of monetary policy. It was also concluded that, the inflation gap was more effective than the production gap. Key Words: Monetary policy, the tools of monetary policy, monetary policy interest reaction, VAR Analysis

Economic Impacts of Bt (Bacillus thuringiensis) Cotton

In recent years, high-yield production has gained importance due to the decrease in agricultural fields in the world and the rapid increase in the population. Cotton is an important source of income for farmers worldwide and is an important crop, especially for the textile industry. Bt-cotton technology, which entered our lives in 1996, has been quickly adopted in many developed and developing countries. It has been shown to provide advantages in many areas. In particular, the economic growth is gaining importance every year. Additionally, it has also brought an environmentally friendly solution to the crop losses caused by insects and pests over the years, by decreasing chemical spraying. Thus, the cost of farmers was reduced and their health was preserved. It enables farmers to be more profitable by shortening the working hours in the fields and reducing labor force. Moreover, this technology has been shown to increase the yield in cotton production. Fifteen years since the commercialization of Bt-cotton technology was first approved and planted, farmers made profit of million dollars from reduced pesticide use. This study includes detailed information about the contribution of Bt-cotton technology to the leading cotton-producing countries' economies, their commercialization, and explores the current methods used in plants transformation. Although there are some conflicts about whether this technology will provide sustainability and long-term benefits, currently, there are 15 countries that have adopted this technology including India, China and the United States. Also, many more countries are expected to be included in this list in the coming years