“Dış Kaynak Kullanımlı Türkiye Ekonomisinde Faiz Artırım Politikası ile Talebi/Enflasyonu Kontrol Etmenin Zorluğu: Çelişkili Bir Enflasyon Hedeflemesi”

Abstract

Considering the excessive dependence of Turkish economy on foreign resources, this study shows that the high interest rate policy of the Central Bank of Republic of Turkey (CBRT) oriented towards disinflation is inefficient. In contrast to the policy expectations, the high interest rate policy increases the aggregate demand in Turkey. Even though the interest rate policies implemented by the CBRT during 2002-2005 and May-June 2006 seem to be different, they are all similar all in the way that they ensure the continuity of the flows of foreign capital to Turkey through higher returns on capital. The foreign resources that are obtained through high interest rates bring about both a lower inflation by putting pressure on exchange rates and sustainable high growth rates. On the other hand, this policy embodies some drawbacks such as a distorted balance of payments and a fragile economic structure. Given the interest rate policy in the periods of 2002-2005 and after May 2006, this study concludes that the CBRT will not be successful in fighting inflation so long as the current condition of the dependence of the Turkish economy on foreign resources does not change.