THE ENDOGENEITY OF MONEY SUPPLY IN TURKISH ECONOMY: AN APPLICATION ON 2006-2014 PERIOD

Post keynesian economists have argued that money supply is endogeneous. it means, central bank cannot control the money supply and money supply is determined by credit demand. the purpose of this study is to analyze money supply is endogeneous or not for the turkish economy in 2006:1 -2014:11 period by using johansen cointegration method. the banking sector dominates the financial system in turkey. for that reason bank credits to the private sector are taken as an independent variable; money supply in the form of m2 is a dependent variable. according to the empirical findings in the analysis it is concluded that, money supply is endogeneous in turkey in that period.