US Monetary Tightening Shocks Cause Economic Turmoil in Small-Open Economies.
The study looked at how both local and global economic shocks impact a small-open economy like Turkey. By using a specific model, the researchers found that when the US tightens its monetary policy, the US Dollar gets stronger against the Turkish lira. This leads to higher consumer prices in Turkey, a decrease in real output, and a tighter monetary policy in response. This shows that global interest rate changes can affect economies around the world.