The Functioning of the Exchange Rate Channel in the Monetary Transmission Mechanism in Türkiye: A Comparison for the Periods of 2013-2017 and 2018-2025

Authors : Nigar Alev

Pages : 278-288

View : 63 | Download : 222

Publication Date : 2025-12-19

Article Type : Research Paper

Abstract :This study aims to conduct a comparative analysis of the functioning of the exchange rate channel within the monetary transmission mechanism in Türkiye, focusing on two distinct periods: 2013–2017 and 2018–2025. The study employs Granger causality tests, impulse-response functions, and variance decomposition techniques, all within the framework of the Vector Autoregressive (VAR) model. The model is constructed using monthly data on interest rates, exports, the real effective exchange rate, and the industrial production index. The empirical findings reveal that, during the 2013–2017 period, industrial production had a unidirectional and significant effect on both interest rates and exports, while the exchange rate had a limited impact on exports and production. In contrast, during the 2018–2025 period, the influence of the real exchange rate on exports became more pronounced, industrial production emerged as a key determinant of both exports and interest rates, and exports provided only limited feedback to industrial production and other macroeconomic variables. Additionally, variance decomposition results indicate that while industrial production was primarily explained by endogenous dynamics, the impact of real exchange rate shocks grew substantially over time.
Keywords : Parasal Aktarım Mekanizması, Döviz Kuru Kanalı, VAR Modeli, Granger Nedensellik.

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