Özet:

In this paper, we investigate the determiners of the interest rates that have real and financial effects on and are important for the balance of budget. The determiners of interest rates are classified as internal and external factors. While testing the cointegrated and long run relationship among variables, monthly data that covers 1996-2004 period has been used. Results show that the main factors influencing the interest rates are internal factors as government spending, inflation, and real income. The results also show that USA interest rates as an external factor has no effect on interest rate on Turkey. The basic reason of it is Turkey’s real interest rates are higher than the world interest rate level.

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