Abstract:

Economics is a science which tries to predict economic behaviour of individuals, firms and governments using macroeconomics variables as well as psychological variables. Credibility is one of the most important psychological variable which has an important effects upon macroeconomic variables. Goverment’s success to reach their macroeconomic targets depend on the perception of investors about goverment policies. If goverment policies are credible goverment can reach its macroeconomic targets easily. This study aims to assess whether IMF arrangements increase the countries (the case study of Turkey) credibility of stabilization policies or not with ARDL model. If IMF arrangements increase the countries’ credibility, countries can reach their macroeconomic targets by applying more flexible monetary and fiscal policies. The results showed that IMF arrangements increase Turkey’s credibility

Keywords: