Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/114620
Authors: 
Abiyev, Vasif
Özgür, Munise Ilıkkan
Year of Publication: 
2014
Citation: 
[Journal:] International Journal of Economic Sciences and Applied Research [ISSN:] 1791-3373 [Volume:] 7 [Year:] 2014 [Issue:] 3 [Pages:] 25-42
Abstract: 
The objective of this paper is to test empirical validity of Fear of Floating hypothesis for Turkey after the adoption of Inflation Targeting. We start applying methodologies developed by Calvo and Reinhart (2002) and Ball and Reyes (2004, 2008) to check the probabilities of changes in exchange rate and monetary policy instruments before and after inflation targeting regime. We then use a VAR model to estimate exchange rate pass-through and response of monetary policy instruments to exchange rate shocks before and after inflation targeting regime. VAR model helps to understand the impacts of switch in monetary policy regime on exchange rate pass-through and foreign exchange market interventions. The paper concludes that after the adoption of inflation targeting regime, the exchange rate pass-through still matters for the attainment of inflation targets and the monetary policy do not exhibit a fear of floating practices.
Subjects: 
Fear of floating
fear of inflation
exchange rate pass-through
free floating exchange rate
JEL: 
F31
E31
E58
Document Type: 
Article

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