The effect of monetary policy on foreign trade balance in Turkey in particular through credit channel

Abstract

The paper is about the possible effect of monetary policy on the post 2001 lending boom and the related current account deficit in Turkey. in the analysis VAR ARDL iRF and Granger causality tests have been used. Moreover the effect of the policy in particular through real interest rates has also been analyzed separately on consumer public and other (business) loans. Even after taking the in uence of global risk appetite as the factor for funds ow into emerging markets including Turkey into the consideration it has been shown that monetary policy seems to affect current account and its main component of foreign trade balance via its in uence on loan growth especially through consumer and other (business) loan channels. --Abracts.