Monetary policy rules in practice: evidence from Turkey and Israel

HAKAN YILMAZKUDAY, VANDERBILT UNIVERSITY
MUSTAFA EGE YAZGAN, ISTANBUL BILGI UNIVERSITY

Abstract

Forward looking monetary policy rules are estimated for Israel and Turkey. When variable inflation targets are taken into consideration, as opposed to the fixed targets used in prior research that use data from developed countries, forward looking Taylor rules seem to provide reasonable description of Central Bank behavior in both countries. In general, it can be said that monetary policy appears to be quite strong in these countries, and especially so in Turkey, when compared with developed countries.