Monetary transmission with multiple policy rates: evidence from Turkey

Quantitative easing policies have led to persistent divergence between officially announced policy rates and short-term money market rates in many economies, making it challenging to assess the stance of monetary policy in the aftermath of the global financial crisis. Lack of data variation in short-term interest rates across time dimension has made it difficult to identify the monetary transmission mechanisms. In order to shed some light on this topic, we make advantage of a specific period from Turkey during which the central bank deliberately allowed the policy rates to diverge frequently from the interbank rates due to capital flow management purposes. Using bank-level flow data from this episode, we investigate the relationship between various short-term interest rate measures and bank loan/deposit rates through panel estimation methods. Our findings suggest that interbank rates are more relevant than central bank’s officially announced rates for the transmission of monetary policy when the two diverge from each other persistently. Interbank rates particularly play a key role in the pricing of loans and deposits. These findings provide helpful guidance for evaluating the monetary stance under unconventional policies.     

The impact of foreign trade issues on economic growth in some developing countries including Iran and Turkey

The issue of foreign trade and economic growth have been on the economic agenda for centuries. Foreign trade is a facilitator of goods and services exchange in the global marketplace and is an engine of economic growth in a country. Moreover, economic growth is a means to improve the output, employment opportunities, and welfare, which in turn could make a favorable impact on the positive foreign trade balance. Economic growth is also an essential component of country competitiveness in international markets. Yet, the objective of this study is to analyze the correlation between foreign trade and economic growth in some developing countries, including Iran and Turkey, by using econometrics applications (panel co-integration method and E-views software), also resting on credible national and international publications. Thus, it is estimated in the study that foreign trade has a positive impact on economic growth, resource allocation, energy and green energy consumption, human capital development, and physical capital consumption.     

Exchange rate dynamics under alternative optimal interest rate rules

We explore the role of interest rate policy in the exchange rate determination process. Specifically, we derive exchange rate equations from interest rate rules that are theoretically optimal under a few alternative settings. The exchange rate equation depends on its underlying interest rule and its performance could vary across evaluation criteria and sample periods. The exchange rate equation implied by the interest rate rule that allows for interest rate and inflation inertia under commitment offers some encouraging results — exchange rate changes “calibrated” from the equation have a positive and significant correlation with actual data, and offer good direction of change prediction. Our exercise also demonstrates the role of the foreign exchange risk premium in determining exchange rates and the difficulty of explaining exchange rate variability using only policy based fundamentals.     

A Comparative Analysis of Global Halal Certification Requirements

The aim of this study is to compare the various Halal certification bodies around the world based on the criteria for Halal certification. As the process of awarding Halal certificates varies among the certification bodies, it is pertinent to identify the differences between these selected certification bodies to gauge the gap existing among them. This study will also identify the position of JAKIM, which is the main Halal certification body in Malaysia, among the other main certification bodies around the world. Nine categories were identified in awarding Halal certification to companies. Comparative analysis was then used to see the differences that exist between these certification bodies. The results of the analysis indicate that, based on the nine categories identified, JAKIM is the strictest body in awarding Halal certification to companies.     

Exchange rate dynamics under alternative optimal interest rate rules

We explore the role of interest rate policy in the exchange rate determination process. Specifically, we derive exchange rate equations from interest rate rules that are theoretically optimal under a few alternative settings. The exchange rate equation depends on its underlying interest rule and its performance could vary across evaluation criteria and sample periods. The exchange rate equation implied by the interest rate rule that allows for interest rate and inflation inertia under commitment offers some encouraging results — exchange rate changes “calibrated” from the equation have a positive and significant correlation with actual data, and offer good direction of change prediction. Our exercise also demonstrates the role of the foreign exchange risk premium in determining exchange rates and the difficulty of explaining exchange rate variability using only policy based fundamentals.     

Demand Analysis of Meat in Malaysia

One distinct change in Malaysians' food consumption behavior has been the preference toward meat products. Thus it is meaningful to gain insight of meat consumption patterns. As the market becomes increasingly market-led, information on current meat consumption patterns is required to assess how they are likely to change as prices and incomes change. This study attempts to provide a better understanding of demand for meat products in Malaysia. By utilizing data from Household Expenditure Survey 2004/2005, Engel curve analysis was conducted to derive income elasticities of meat products from QUAIDS model. The estimated income elasticities show that current food consumption patterns are showing signs of convergence toward a Western diet, exhibiting tendency for preference toward red meats (mutton and beef) over white meats (poultry and pork). The estimated elastic own-price elasticities indicate that Malaysian consumers are sensitive to the change in prices of the meat products, with other things remain constant.     

Controlling capital? Legal restrictions and the asset composition of international financial flows

How effective are capital account restrictions? We provide new answers based on a novel panel data set of capital controls, disaggregated by asset class and by inflows/outflows, covering 74 countries during 1995–2005. We find the estimated effects of capital controls to vary markedly across the types of capital controls, both by asset categories, by the direction of flows, and across countries' income levels. In particular, both debt and equity controls can substantially reduce outflows, with little effect on capital inflows, but only high-income countries appear able to effectively impose debt (outflow) controls. The results imply that capital controls can affect both the volume and the composition of capital flows.