Asymmetric Effectiveness of Monetary and Fiscal Policies: Evidence from Turkey

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Cemal Öztürk
Günsenin Altınkaynak


This study assesses the asymmetric effectiveness of Turkey's monetary policy and fiscal policy under the inflation targeting regime in the period of 2006-2020. We employed the non-linear autoregressive distributed lag (NARDL) method and Hatemi-J asymmetric causality test with the assistance of the St. Louis equation, which relates the growth in nominal income with the growth in money supply and public expenditures. The NARDL model revealed that an increase in money supply and gross domestic product (GDP) has a positive relationship. On the other hand, a decrease in money supply and government expenditures have no significant relationship with GDP. In addition, Hatemi-J asymmetric causality results showed an asymmetric causality between money supply and GDP. It demonstrates that the money supply in Turkey during the period 2006-2020 is endogenous.

JEL classification:  C22, E63, E52

Keywords:  St. Louis equation, NARDL, Asymmetric causality


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How to Cite
Öztürk, C. and Altınkaynak, G. (2022) “Asymmetric Effectiveness of Monetary and Fiscal Policies: Evidence from Turkey”, World Journal of Applied Economics, 8(1), pp. 1-14. doi: 10.22440/wjae.8.1.1.
Research Articles


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