The seminar in which Dr. Okan AKARSU, Economist at the Central Bank of the Republic of Türkiye’s Directorate General of International Economic Relations, presented his two studies on Monetary Policy was held on 25 November 2025 at 12:30 in the Meeting Room on the 7th Floor of Block C, North Campus. The event was attended by several faculty members, including our Department Chair and the Dean of the Faculty of Political Science, Prof. Dr. Faruk BAL.
AKARSU discussed his two recent studies analyzing how firms’ expectations shape their economic decisions in a high-inflation environment. The studies were complementary in both their methodological approaches and empirical findings. Both rely on exogenous variation in firms’ inflation expectations. The first study uses the Central Bank’s unexpected interest rate cut in September 2021 as a natural experiment (quasi-experiment). The heterogeneous revisions in firms’ inflation expectations triggered by this policy shock are treated as an exogenous “treatment,” allowing the researchers to track how employment, sales, procurement, and borrowing decisions evolve using administrative data. The second study employs a randomized information treatment, in which firms were provided with different inflation-related information. These survey-based interventions generated exogenous variation in expectations. AKARSU explained that by matching these expectation changes with administrative data on employment, sales, credit structure, and foreign exchange transactions, he was able to identify causal relationships with precision.
The joint findings of the two studies show that when inflation expectations rise, firms adopt a more pessimistic outlook, reducing employment and domestic sales while taking strategic actions such as increasing procurement, accumulating foreign currency assets, and bringing forward borrowing. Conversely, firms whose expectations are lowered become more optimistic, reduce their credit demand, shift toward short-term borrowing, adjust their foreign currency positions, and increase employment and sales.
AKARSU concluded his presentation by emphasizing the central role of inflation expectations in shaping firms’ production and financial decisions, as well as the critical importance of policy credibility in this process. Following a Q&A session with the participants, the seminar came to an end.
GALLERY
