E71 - Macro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro EconomyReturn

This study examines deposit and credit dollarization in Turkey, with a particular focus on whether consumer confidence moderates the relationship between interest rates and dollarization. Using monthly data from January 2012 to May 2025, we estimate an autoregressive distributed lag model as the main empirical framework and assess robustness using fully modified ordinary least squares, dynamic ordinary least squares, and canonical cointegration regression. The empirical findings indicate a conditional association between interest rates and dollarization, which should be interpreted cautiously, given potential simultaneity and endogeneity concerns. This relationship is conditional on consumer confidence: as confidence rises, the marginal (de-dollarizing) association between interest rates and dollarization weakens, whereas it strengthens when confidence is low. Additionally, exchange rate depreciation appears to amplify dollarization pressures. By contrast, the post-2022 policy-regime period (captured by the dummy variable) is negatively associated with both deposit and credit dollarization. This outcome likely reflects several simultaneous developments rather than a single, isolated policy effect. Overall, the findings suggest that in emerging economies such as Turkey, interest-rate strategies for de-dollarization are most potent during periods of low consumer confidence, as the marginal effectiveness of rate hikes diminishes as sentiment improves. Our findings suggest that in emerging economies such as Turkey, interest-rate strategies for de-dollarization are most potent during periods of low consumer confidence, as the marginal effectiveness of rate hikes diminishes as sentiment improves. This highlights the importance of decisive monetary policy in fragile confidence environments, complemented by long-term measures that reinforce macroeconomic stability and institutional credibility.

The objective of this paper is to examine one of the essential behavioural concepts - the 'status quo bias' - on the available macroeconomic data. The recent global economic crisis has provided a valuable opportunity for analysing the concept and ensured that relevant and sufficient inputs for such academic research are available. Specifically, to study the 'status quo bias', this paper studies the relation between consumption and income before and after the 2008 economic crisis in a selected country. As such, this study attempts to provide answers to such questions as: How strongly is consumption dependent on income prior to and after the crisis? What are the forces behind consumption during the assessed period - income or existing quality of living? What conclusions can be drawn for public finance from the analysis? The findings indicate that the 'status quo bias' behavioural concept could be confirmed based on the tested macroeconomic data, and possible implications for public finance are presented as well.