Abstract:

The Central Bank of the Republic of Turkey has since 2006 used the open inflation targeting regime to ensure price stability. The Taylor Rule provides important information to the Central Banks that are adopting the inflation targeting regime because of the policy makers. The main objective of this study is to determine the validity of the Taylor Rule for the Turkish economy between the periods 2006:1-2018:6. According to the analysis of the method of the smallest quarters (ECK), the policy interest rate, inflation rate, output gap and exchange rate have been shown to give meaningful reactions. In this context, the production gap, the inflation gap and the interest rate are a positive response.