Parasal Aktar m Mekanizmas D viz Kuru Kanal : Türkiye rne i(Monetary Transmission Mechanism Exchange Rate Channel: The Case of Turkey)

Monetary transmission mechanism used by monetary authorities in determining the relationship between real economy and monetary targets are fundamentally classified as traditional interest rate channel, other asset prices channel, expectations channel and credit channel. Exchange rate channel which is analyzed under the scope of other asset prices channel and effective on the net export volume, has gained importance through widespread use of flexible exchange rate system with the increase of globalization. In this study, the effectiveness of monetary transmission mechanism exchange rate channel on total output and price level is analyzed by using VAR model for Turkey which has adopted flexible exchange rate regime. As a result of the test with a total of five macroeconomic variables, short-run interest rate, real effective exchange rate, net export volume, consumer price index and industrial production index, for the period of 2003:01-2010:08, it is found that the exchange rate channel which includes the effects of interest rate channel is effective in Turkey.