Is Gold a Hedge Against Turkish Lira?

• Authors: Feride Ozturk , Sezgin Acikalin
• Languages of publication: EN

Abstracts

EN

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.

• Publisher: Sciendo
• Journal: South East European Journal of Economics and Business
• Year: 2008
• Volume: 3
• Issue: 1
• Pages: 35-40

Dates

published

2008-04-01

online

2008-04-14

Contributors

author

Feride Ozturk

• Department of Economics, Dunlupinar University, Tavsanli Yolu 10.Km, Kutahya, Turkey

author

Sezgin Acikalin

• Department of Economics, Dunlupinar University, Tavsanli Yolu 10.Km, Kutahya, Turkey

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Identifiers

DOI

10.2478/v10033-008-0004-x