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The main purpose of this study is to investigate the factors that the impact of macroeconomic variables, which is effective on money demand and the stability of the money demand function in Turkey. The analysis covers the period after the 2008 financial crisis, where there was powerful monetary easing in developed countries (2008-2018). In the study, the M2 money supply is preferred as monetary aggregates. Variables that are investigated the effect are real income, interest rate and exchange rate. ARDL approach and CUSUM-CUSUMSQ test are used as methods. The analysis is performed with quarterly data. According to the results of the analysis, real income and exchange rate have a positive effect and the interest rate has a negative effect on money demand in the long term. In the short term, while the effect of real income and exchange rate on money demand continue, the effect of interest rate is disappeared. [ABSTRACT FROM AUTHOR]

The idea of the hypothesis of the money supply as a theory is based on the Post Keynesians. This hypothesis suggests that there is a causal relationship between credit and money supply and monetary base in an economy. With the developing financial system and financial innovations, the endogeneity of money supply is one of the priority issues to be studied. For this reason it is important to consider the endogeneity of money supply in a theoretical and empirical context. In this study, the hypothesis of endogeneity money supply for Turkey's economy was investigated by Toda-Yamamoto and Bootstrap Toda-Yamamoto causality analysis procedures for the period 2006-2018. Empirical findings show that there is a causal relationship between credit and money supply, monetary base and money multiplier. There is also a causal relationship from money supply to credit. In this case, the bidirectional causality relationship between credit and money multiplier supports the view of liquidity preference regarding the endogeneity of money supply. [ABSTRACT FROM AUTHOR]

This empirical study investigates the stability of the money demand function in Turkey from 1989:Q1 to 2011:Q2 by employing bounds test and also rolling bounds test approaches. Unlike the previous studies, we also add the stock prices to the money demand function to overcome the excluded variables problem. The results we obtained show that the money demand function is instable in the analysis period, thus the central bank should not use the M2 broad money supply as a monetary policy instrument. [ABSTRACT FROM AUTHOR]