IDEAS home Printed from https://ideas.repec.org/a/arp/ijefrr/2019p238-251.html
   My bibliography  Save this article

Measures of the Output Gap in Turkey: An Empirical Assessment of Selected Methods

Author

Listed:
  • Ä°lyas Şıklar*

    (Anadolu University, Department of Economics, Turkey)

  • Suzan Åžahin

    (Anadolu University, Department of Economics, Turkey)

Abstract

The output gap indicating the difference between the actual and potential levels of output is a critical factor for estimating the inflationary pressures in an economy. If the main target of a central bank is ensuring and maintaining the price stability, estimating the output gap with a minimum error is crucial for the efficiency of the monetary policy. In this study, we estimated the output gap in Turkey for the 2002-2014 period by using four different methods. Two of these estimation methods are purely statistical (Linear Trend and Hodrick-Presscot (HP) Filtering) while the others are integrated with the relations suggested by the economic theory (multivariate structural model and structural autoregressive (SVAR) model). By using empirical decision criteria common in the literature, we conclude that SVAR model produces the most reliable output gap estimates to explain inflationary pressures in Turkey. However, we also found that the Hodrick-Presscot filtering method is the second best methodology in the output gap estimation process.

Suggested Citation

  • Ä°lyas Şıklar* & Suzan Åžahin, 2019. "Measures of the Output Gap in Turkey: An Empirical Assessment of Selected Methods," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 5(11), pages 238-251, 11-2019.
    • Handle: RePEc:arp:ijefrr:2019:p:238-251
    as

    Download full text from publisher

    File URL: https://www.arpgweb.com/pdf-files/ijefr5(11)238-251.pdf
    Download Restriction: no
    File URL: https://www.arpgweb.com/journal/5/archive/11-2019/11/5
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arp:ijefrr:2019:p:238-251. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Managing Editor (email available below). General contact details of provider: http://www.arpgweb.com/?ic=journal&journal=5&info=aims .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.