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Is Gold a Hedge Against Turkish Lira?
- Source :
- South East European Journal of Economics & Business (1840118X); Apr2008, Vol. 3 Issue 1, p35-40, 6p, 3 Charts, 3 Graphs
- Publication Year :
- 2008
-
Abstract
- This paper investigates whether gold is an internal hedge and/or an external hedge against Turkish lira (TL) by using monthly data from January 1995 to November 2006. Cointegration test results confirm the long-term relationships between the gold price and consumer price index and between the gold price and TL/US dollar exchange rate. The Granger Tests, based on vector error correction model (VECM), indicate that gold price Granger causes the consumer price index and TL/US dollar exchange rate in a unidirectional way. It is concluded that gold acts as an effective hedge against potential future TL depreciation and rising domestic inflation. Furthermore, gold price may be considered as a good indicator of inflation and hence it can be used as a guide to monetary policy. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 1840118X
- Volume :
- 3
- Issue :
- 1
- Database :
- Complementary Index
- Journal :
- South East European Journal of Economics & Business (1840118X)
- Publication Type :
- Academic Journal
- Accession number :
- 31655157
- Full Text :
- https://doi.org/10.2478/v10033-008-0004-x