REASONS FOR OPTIMISM IN THE TURKISH ECONOMY

Under the assumption of a closed economy, in the period of\n1960-85, the equilibrium and stability conditions of the Turkish\neconomy, are analysed by means of a differential equations model\nof three equations; changes in the rate of inflation, the rate of\ngrowth and inflation expectations. These equations are mainly based\non the regression analyses of money demand, change in inflation, expectations\naugmented Phillips curve, the real growth effects of\nmonetaiy shocks, and the changes in the economic growth depending\non the difference between the realised and average growth rates.\nParameter combinations indicate that during the above mentioned\nperiod, the Turkish economy may reach equilibrium which\nrather seems to be stable and of a monetarist type. Therefore in\norder to attain the inflation objective, the goverments have to follow\na reconcilable monetaiy policy.