Credit, Money and Macroeconomic Policy
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Credit, Money and Macroeconomic Policy

A Post-Keynesian Approach

Edited by Claude Gnos and Louis-Philippe Rochon

With recent turmoil in financial markets around the world, this unique and up-to-date book addresses a number of challenging issues regarding monetary policy, financial markets and macroeconomic policy.
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Chapter 14: Turkish Monetary Policy in a Post-Crises Era: A Further Case of ‘New Consensus’?

Ulas Sener


14. Turkish monetary policy in a postcrises era: a further case of ‘new consensus’? Ulaş Şener INTRODUCTION The Turkish economy’s affection with neoliberalism that led to liquidity and currency crises during the transition period of 2000–01, triggered a triple shock: the currency was hit, output and employment decreased, and interest rates rose significantly. After the crises, Turkey went through a sequel of orthodox economic liberalization, which also coincided with an intensified EU integration process. In order to overcome the financial instability and meet the EU membership requirements, extensive restructuring reforms were implemented. These reforms comprised both deregulation and re-regulation. Liberalization and large-scale privatization were adopted in all public sectors, accompanied by new regulations to stabilize the financial and banking sector. While there is a general consensus that this incidental crisis set a breaking point for the economy and altered state–society relations, the direction of this change is a matter of debate. The crisis created an opportunity for certain domestic and external actors (such as the International Monetary Fund (IMF) and the EU), who had been favoring radical reforms and institutional changes (see Derviş et al., 2006:§4(2)).1 Critical heterodox analysts argue that such institutional reforms and adjustments intensify special policies, a phenomenon that Stephen Gill calls ‘Disciplinary Neoliberalism’ (1998). In the context of highly integrated and unregulated financial markets, the neoliberal hegemony institutionalizes deflationary policies and economic austerity at both the international and national levels (Argitis and Pitelis, 2006). These policies are identified as a systemic...

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