Fiscal dominance and inflation targeting: lessons from Turkey

Ersel, Hasan and Özatay, Fatih (2008) Fiscal dominance and inflation targeting: lessons from Turkey. Emerging Markets Finance and Trade, 44 (6). pp. 38-51. ISSN 1540-496X

Full text not available from this repository. (Request a copy)


In the aftermath of the 2000-2001 crisis in Turkey, the banking sector was in turbulence, requiring immediate action. The rescue operation significantly increased the public debt ratio with respect to gross domestic product. At the beginning of 2002, the central bank of Turkey announced that it was going to implement an implicit inflation-targeting regime. The fiscal dominance caused by the high debt ratio severely constrained the conduct of monetary policy. Other obstacles to the conduct of monetary policy included a high level of exchange rate pass-through, inflation inertia, and a weak banking sector. This paper offers an account of the monetary policy experience of Turkey in the postcrisis period and provides lessons for policymakers in other emerging markets.
Item Type: Article
Uncontrolled Keywords: fiscal dominance; financial sector; exchange rate pass-through; inflation inertia; inflation targeting
Divisions: Faculty of Arts and Social Sciences
Depositing User: Hasan Ersel
Date Deposited: 24 Mar 2009 10:45
Last Modified: 22 Jul 2019 15:27

Actions (login required)

View Item
View Item