The Asymmetric Effects of Monetary Policy on Economic Activity in Turkey

Abstract

In this paper, we look at the sector-level asymmetric effects of the monetary policy shocks on economic activity in Turkey. Using business cycles for the state of the economy, we find that monetary policy shocks have strong effects on both aggregate GDP, services and industrial production and sub-sectors during recessionary periods. The results are weaker for the expansionary periods. We further study whether the results depend on the state of the credit cycles. Similar results emerge in that the monetary policy is more effective during credit slowdowns with economically more feasible quantitative effects compared to the business cycles