Macroprudential Policies as Buffer Against Volatile Cross-border Capital Flows

Macroprudential Policies as Buffer Against Volatile Cross-border Capital Flows

Başlık:

Macroprudential Policies as Buffer Against Volatile Cross-border Capital Flows

Sayı:

14/04

Yazar(lar):

Ahmet Faruk Aysan, Salih Fendoğlu, Mustafa Kılınç

Dil:

English

Tarih:

February 2014

Özet:

This paper investigates the effectiveness of macroprudential policies introduced by Turkey in late 2010. The unprecedented quantitative easing policies of advanced countries after the global financial crisis have presented serious financial stability concerns for most emerging countries including Turkey. To cope with these challenges, Turkey has devised new policy tools such as asymmetric interest rate corridor and reserve option mechanism. From the perspective of capital flows, the interest rate corridor works mainly through stabilizing supply of foreign funds, and the reserve option mechanism through decreasing the sensitivity of demand for foreign funds to shifts in the supply. Using a large panel of 46 countries and employing Bruno and Shin (2013a,b)’s methodology, we investigate whether the new policy framework in Turkey has been successful in cushioning the economy from volatile cross-border capital flows from a comparative perspective. The results show that, after controlling for a set of domestic and external variables and relative to a group of advanced and emerging countries, cross-border capital flows to Turkey have been less sensitive to global factors after the implementation of macroprudential policies.

Anahtar Kelimeler:

Capital Flows, Macroprudential Policies

JEL Sınıflaması:

E58; F32; F34

Macroprudential Policies as Buffer Against Volatile Cross-border Capital Flows
CENTRAL BANK OF THE REPUBLIC OF TURKEY Head Office Anafartalar Mah. İstiklal Cad. No:10 06050 Ulus Altındağ Ankara Phone : (+90 312) 507 50 00 | Fax : (+90 312) 507 56 40