Optimal Monetary Policy, Commitment, and Imperfect Credibility

In the conventional optimal monetary policy framework, two key assumptions underline the full commitment solution : Monetary authority is perfectly credible, and can commit for an infinite number of periods. Using a baseline forward-looking model, this study explores the implications of relaxing these assumptions in turn. First, finite lasting commitments are introduced using a stochastic exogenous process that generates policy reoptimizations. As a consequence, monetary policy is characterized with a continuum from pure discretion to full commitment. Second, we solve the optimal and robust targeting rules when the central bank confronts imperfect and/or uncertain credibility. Imperfect credibility is defined as a situation in which the private sector expects the commitment regime to end sooner than that is intended by the policy maker. The results indicate that, under imperfect credibility, optimal policy becomes observationally closer to the discretionary solution, the more being so as the degree of uncertainty rises. These findings may be insightful for explaining the observed near-discretionary behavior of the central banks, which indeed operate under imperfect credibility.Optimal Monetary Policy, Stabilization Bias, Imperfect Credibility, Discretion, Commitment

Turkish Experience With Implicit Inflation Targeting

This paper describes the challenges faced during the implementation of implicit inflation targeting in Turkey and evaluates the transition process to full-fledged inflation targeting. Using this background, the paper draws lessons for similar countries considering inflation targeting as a monetary policy regime. We argue that, the strategy of starting inflation targeting with an "implicit" version and gradually converging to full-fledged targeting can be a viable option when certain set of conditions is not satisfied. We conjecture, however, that implementing a "light" version?namely implicit inflation targeting?does not necessarily mean that the system would be exempt from all the prerequisites. In the Turkish case, for example, institutional independence and political support seem to have been the fundamental conditions for initiating the process of inflation targeting.Implicit inflation targeting, Price stability, Turkey

Threshold-based Selective Cooperative-NOMA

In this letter, we propose threshold-based selective cooperative-NOMA (TBS-C-NOMA) to increase the data reliability of conventional cooperative-NOMA (C-NOMA) networks. In TBS-C-NOMA, the intra-cell user forwards the symbols of cell-edge user after successive interference canceler (SIC) only if the signal-to-interference plus noise ratio (SINR) is greater than the pre-determined threshold value. Hence, the data reliability of the cell-edge user is increased by eliminating the effect of the error propagation. We derive closed-form end-to-end exact bit error probability (BEP) of proposed system for various modulation constellations. Then, the optimum threshold value is analyzed in order to minimize BEP. The obtained expressions are validated via simulations and it is revealed that TBS-C-NOMA outperforms C-NOMA and full diversity order is achieved

Performance Analysis of SSK-NOMA

In this paper, we consider the combination between two promising techniques: space-shift keying (SSK) and non-orthogonal multiple access (NOMA) for future radio access networks. We analyze the performance of SSK-NOMA networks and provide a comprehensive analytical framework of SSK-NOMA regarding bit error probability (BEP), ergodic capacity and outage probability. It is worth pointing out all analysis also stand for conventional SIMO-NOMA networks. We derive closed-form exact average BEP (ABEP) expressions when the number of users in a resource block is equal to i.e., $L=3$. Nevertheless, we analyze the ABEP of users when the number of users is more than i.e., $L\geq3$, and derive bit-error-rate (BER) union bound since the error propagation due to iterative successive interference canceler (SIC) makes the exact analysis intractable. Then, we analyze the achievable rate of users and derive exact ergodic capacity of the users so the ergodic sum rate of the system in closed-forms. Moreover, we provide the average outage probability of the users exactly in the closed-form. All derived expressions are validated via Monte Carlo simulations and it is proved that SSK-NOMA outperforms conventional NOMA networks in terms of all performance metrics (i.e., BER, sum rate, outage). Finally, the effect of the power allocation (PA) on the performance of SSK-NOMA networks is investigated and the optimum PA is discussed under BER and outage constraints

Exchange Rate Pass-Through in Turkey : It is Slow, but is it Really Low?

Using a vector auto-regression (VAR) setup, we estimate the pass-through from exchange rates and import prices to domestic inflation in Turkey, and produce some stylized facts regarding the degree and the adjustment speed of the pass-through on several price measures. Estimations for two distinct periods-before and after the adoption of floating exchange rate regime-yield both good and bad news. The good news is, our impulse responses confirm the common conjecture that pass-through has weakened and slowed down after the adoption of floating exchange rate regime. The bad news is, surprisingly low pass-through in recent years partly owes to the fact that exchange rate shocks were not persistent in direction. In other words, total pass-through might have been sizable had the economy been hit by one-sided shocks such as a persistent depreciation.

Some Evidence on the Irrationality of Inflation Expectations in Turkey

This study aims to add to the understanding of inflation expectations in Turkey. We conduct several tests to understand whether economic agents use all the available information to forecast inflation. The answer is a lucid “NO”: Using 5 different quantitative expectations series from 3 different surveys, we find that all the expectations series, except the one month ahead forecasts, are biased and inefficient. Furthermore, forecast errors in many cases are significantly correlated with exchange rate changes, revealing that agents do not take into account the lagged effects of the exchange rate movements on inflation while forming their expectations. That is, the role of exchange rate pass-through, as a determinant of inflation, is not well understood. These results also suggest that some form of deviation from rational expectations may be necessary—at least during the disinflation period—in modeling inflation dynamics.

Monetary policy communication under inflation targeting: Do words speak louder than actions?

This paper assesses the effectiveness of monetary policy communication of the Central Bank of Turkey (CBT) by quantifying the information content of the policy statements released right after the monthly Monetary Policy Committee meetings. First, we quantify the signal regarding the next interest rate decision and ask whether CBT’s words match its deeds, i.e., whether communication improves predictability using the Autoregressive Conditional Hazard model. Our findings suggest that the role of statements in predicting the next policy move have strengthened following the adoption of full-fledged inflation targeting (IT) regime. Second, we identify the surprise component of policy communication directly from market commentaries and assess its impact on the term structure of interest rates. We find that the response of the yield curve to policy statements have become highly significant for the unanticipated changes in the monetary policy communication and the relative importance of communication in driving market yields has increased through time.Central Bank Communication, Predictability, Transparency

Derivation of the closed-form BER expressions for DL-NOMA over Nakagami-m fading channels

NOMA is as a strong candidate for the Future Radio Access Network (FRA) due to its potential to support massive connectivity and high spectral efficiency. However, the most important drawback of NOMA is the error during Successive Interference Canceller (SIC) is implemented because of the inter-user interferences. In this paper, we derive closed-form exact Bit-Error Rate expressions for Downlink(DL) NOMA over Nakagami-m fading channels in the presence of SIC errors. The derived expressions are validated by the computer simulations. It is shown that the m parameter still represents the diversity order like as OMA systems. Besides, the BER performances of users for NOMA have substantially depended on the power allocation coefficient.Comment: 26.IEEE Signal Processing and Communications Applications Conference,Izmir,Turke