Macroeconomic Policies and the New Central Bank in Turkey, 1929–1939

doi:10.1017/9781009367578.014

11 - Macroeconomic Policies and the New Central Bank in Turkey, 1929–1939

from Part II - Specific

Published online by Cambridge University Press: 02 November 2023

Şevket Pamuk

Edited by

Barry Eichengreen and

Andreas Kakridis

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Barry Eichengreen: Affiliation:
University of California, Berkeley
Andreas Kakridis: Affiliation:
Bank of Greece and Panteion University, Athens

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Summary

This chapter analyses macroeconomic policy, with a focus on monetary policy, relating it to the performance of the economy in Turkey in the Great Depression. The Depression was transmitted to Turkey primarily through a sharp decline in agricultural commodity prices. In response, the government adopted strongly protectionist measures starting in 1929 and pursued import-substituting industrialization. In contrast, Turkey’s macroeconomic policy was cautious. Fiscal policy adhered to the principle of balanced budgets. The policies of the new central bank, established in 1930, were similarly restrained: as a result, the monetary base increased very little before 1938. While this restraint resulted in some appreciation of the currency, Turkey’s economy did better than most others around the Eastern Mediterranean. The chapter argues this performance was primarily due to strong protectionism, which paid benefits in the short run, and recovery in the agricultural sector.

Keywords

Turkey Great Depression macroeconomic policies protectionism Etatism monetary policy fiscal policy Central Bank industrialization

Type: Chapter
Information: The Spread of the Modern Central Bank and Global Cooperation
1919–1939
, pp. 301 - 319

DOI: https://doi.org/10.1017/9781009367578.014 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2023

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11 - Macroeconomic Policies and the New Central Bank in Turkey, 1929–1939

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