ASYMMETRIC EFFECTS OF MONETARY AND FISCAL POLICIES ON THE ECONOMIC ACTIVITY: EMPIRICAL EVIDENCE FROM TURKEY1

In this study, it is aimed to compare the efficiency of monetary and fiscal policy as well as to compare the expansionary-contractionary policy by investigating the asymmetric effects of monetary and fiscal policies with positivenegative shock asymmetry. In addition, it is aimed to contribute to the literature by testing the asymmetric effects of price and exchange rate shocks on output other than monetary and fiscal policies. The analysis was carried out with monthly data covering the period 2005:12-2019:08. Monetary policy variables used in the analysis are M2 money supply and policy interest rate. Moreover, used fiscal policy variables are government revenues (taxes) and non-interest government expenditures. The NARDL method is used in the analysis. The results show that both fiscal and monetary policy are effective in dealing with recession and stimulating economic activity, and the interest rate, which is one of the monetary policy tools, is the most effective policy tool.