Evaluation of Endogeneity of Money Supply under Inflation Targeting Implementation in Turkey

This study aimed to question how successful the CBRT could be in the process of determining the money supply by acting in all these motivational conditions. To achieve this aim M3 as a proxy variable to the money supply, the banking sector loan volume as a proxy for the money demand has been dealt w...

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Bibliographic Details
Published inFiscaoeconomia Vol. 2; no. 3; pp. 143 - 150
Main Author Demirel, Baki
Format Journal Article
LanguageEnglish
Published Ahmet Arif Eren 30.09.2018
Subjects
Economic policy
Financial Markets
Methodology and research technology
National Economy
Public Finances
Money Supply
Granger Causality Test
Error Correction Model
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Summary:This study aimed to question how successful the CBRT could be in the process of determining the money supply by acting in all these motivational conditions. To achieve this aim M3 as a proxy variable to the money supply, the banking sector loan volume as a proxy for the money demand has been dealt with. The study tested the causality relationship between variables using the Granger Causality Test and Error Correction Model. According to the results of the Granger Causality Test, in the long run, the direction of causality between the money supply and credit expansion is straightforward from the money supply to the credit extension. According to the findings of the Error Correction Model, there is a positive and statistically significant relationship between money supply and credit expansion in the short term. Credit expansion increases money supply.
ISSN:2564-7504
2564-7504
DOI:10.25295/fsecon.2018.03.006