Aggressive monetary policy in Turkey boosts inflation but hampers economic growth.
The study looked at how aggressive monetary policy affects inflation and other economic factors in Turkey. Researchers used a model and data from 2000 to 2019 to analyze the impact. They found that aggressive monetary policy increases the effect of monetary policy on inflation, but decreases its impact on output and interest rates. Over time, aggressive policy also boosts the effect of supply shocks on the economy. This suggests that if Turkey's Central Bank wants to use aggressive monetary policy to control prices, they should be aware that it may have diminishing effects on the real economy and interest rates.