publication . Preprint . 2008

A Model of Exchange-Rate-Based Stabilization for Turkey

Ozlem Aytac;
Open Access
  • Published: 01 Jan 2008
The literature on the exchange-rate-based stabilization has focused almost exclusively in Latin America. Many other countries however, such as Egypt, Lebanon and Turkey; have undertaken this sort of programs in the last 10-15 years. I depart from the existing literature by developing a model specifically for the 2000-2001 heterodox exchange-rate-based stabilization program in Turkey: When the government lowers the rate of crawl, the rate of domestic credit creation is set equal to the lower rate of crawl, bond sales finance the fiscal deficit, and money growth occurs only through capital inflows. Without appealing to high intertemporal elasticity of substitution...
free text keywords: inflation, exchange-rate-based stabilization, durables, jel:E31, jel:E63, jel:F41
Related Organizations

Agenor, R. and P. Montiel, 1999, Development Macroeconomics, 2nd edition (Princeton University Press, Princeton).

Domac, I., and M. Bahmani-Oskooee, 2002, “On the Link Between Dollarization and Inflation: Evidence From Turkey.” The Central Bank of Republic of Turkey Discussion Paper. [OpenAIRE]

Ozmen, E., 1998, “Is Currency Seigniorage Exogenous for Inflation Tax in Turkey.” Applied Economics 30, 545-552.

Uribe, M., 1997, “Exchange Rate Based Inflation Stabilization: The Initial Real Effects of Credible Plans.” Journal of Monetary Economics 39, 197-221.

Vegh, C.A., 1992, “Stopping High Inflation: An Analytical Overview.” International Monetary Fund Staff Paper 39, 626-695.

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