Nominal GNP: An Anchor For Monetary Policy in Turkey?

This paper provides an overview of a recent proposal of nominal GNP as \nan anchor for monetary policy and investigates the feasibility of its adoption \nin Turkey. The empirical framework employed evaluates the feasibility of the \nadoption of this policy on three grounds. First, whether the central bank can \ncontrol the instrument, namely the monetary base. Second, whether there exists \na stable long-run relationship between nominal GNP and the monetary base. \nThird, whether the monetary base is a useful predictor of nominal GNP. \nAlthough the empirical results lend support to its adoption, a successful \nimplementation of this policy hinges crucially on the existence of a legally and \noperationally independent central bank.