Conference Paper
Monetary Policy Spillover Effects of the Fed and the ECB: Evidence from Turkiye
No.
ERF_31_MC96
Publisher
ERF
Date
March, 2025
Topic
E. Macroeconomics and Monetary Economics
This paper examines the spillover effects of the U.S. Federal Reserve (Fed) and the European Central Bank (ECB) monetary policies on Turkiye. We examine the distinct impacts of three dimensions of monetary policy: interest rate changes, forward guidance, and quantitative easing (QE), on key financial and macroeconomic variables in Turkiye, using a high-frequency identification approach to capture policy shocks, and applying a Bayesian VAR model to address short sample size issues. Our findings reveal that while interest rate changes primarily affect financial variables, forward guidance and QE shocks appear to have a greater effect on output and inflation. Furthermore, U.S. policies seem to exert a stronger effect on financial variables in Turkiye. The results offer valuable insights into the different dimensions of monetary policy, highlighting the importance of closely monitoring the policy shifts of advanced economies to mitigate potential risks to financial stability and economic growth for policymakers in the emerging markets.
Research Fellows
Ayse Yasemin Yalta
Professor, Department of Economics, Hacettepe University, Turkey
Research Fellows
Abdullah Talha Yalta
Professor of Economics, TOBB University of Economics...