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Testing the Validity of Taylor's Rule on Developing Countries for Effective Financial Marketing

Testing the Validity of Taylor's Rule on Developing Countries for Effective Financial Marketing

Ali Doğdu, Gökçe Kurucu, İhsan Erdem Kayral
ISBN13: 9781799825593|ISBN10: 1799825590|EISBN13: 9781799825609
DOI: 10.4018/978-1-7998-2559-3.ch021
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MLA

Doğdu, Ali, et al. "Testing the Validity of Taylor's Rule on Developing Countries for Effective Financial Marketing." Handbook of Research on Decision-Making Techniques in Financial Marketing, edited by Hasan Dinçer and Serhat Yüksel, IGI Global, 2020, pp. 450-470. https://doi.org/10.4018/978-1-7998-2559-3.ch021

APA

Doğdu, A., Kurucu, G., & Kayral, İ. E. (2020). Testing the Validity of Taylor's Rule on Developing Countries for Effective Financial Marketing. In H. Dinçer & S. Yüksel (Eds.), Handbook of Research on Decision-Making Techniques in Financial Marketing (pp. 450-470). IGI Global. https://doi.org/10.4018/978-1-7998-2559-3.ch021

Chicago

Doğdu, Ali, Gökçe Kurucu, and İhsan Erdem Kayral. "Testing the Validity of Taylor's Rule on Developing Countries for Effective Financial Marketing." In Handbook of Research on Decision-Making Techniques in Financial Marketing, edited by Hasan Dinçer and Serhat Yüksel, 450-470. Hershey, PA: IGI Global, 2020. https://doi.org/10.4018/978-1-7998-2559-3.ch021

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Abstract

This chapter examines whether the central bank policy behaviors of E-7 countries are valid by using a Taylor type monetary policy response function. In this context, the policy response function of banks is analyzed by using monthly data for the 2008-2018 period. Then, unit root tests of ADF (Augmented Dickey Fuller), PP (Philips Perron), IPS (Im Peseran Shin) and LLC (Levin Lin Chu) were performed and analyzed by using Dumitrescu-Hurlin methodology. As a result of the analyses conducted using inflationary data, it was observed that short-term interest rates of the central bank affect price stability by causing inflation, but inflation rates did not cause an increase or decrease in short-term interest rates. According to the findings, although inflation does not cause interest rates to change in E7 countries, a causality relationship has emerged from interest rates to inflation rates. These results indicate that the monetary policies implemented in these countries are not carried out in accordance with the Taylor rule.

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