Relative Price Variability : The Case of Turkey 1994-2002
AbstractRelative price variability leads to inefficiencies in the allocation of resources that reduce real income (Fischer, 1981). Given the costs associated with relative price variability, the relation between inflation and relative price variability was extensively researched and a positive relation between the two was documented for many countries and for varying time periods. Furthermore, one of the main sources of relative price variability being differential speeds of price adjustment in different sub-sectors, renders the investigation of relative price variability valuable also in terms of understanding the inflationary dynamics. In this paper, highly disaggregated data based on 103 classification of Turkish CPI for the period between January 1994 and December 2002 are utilised. The statistical findings based on Theil (1967) measure of relative price variability, are analyzed from different perspectives : seasonal pattern, time aggregation, different sub-groups, e.g. tradable/non-tradable prices, administered/non-administered prices etc. Resulting stylized facts about recent dynamics of inflation are presented. The relation between relative price variability and inflation is verified by carrying out model-free regressions. The results show that there is a positive contemporaneous association between relative price variability and inflation in Turkey. Besides, inflation is found to Granger-cause relative price variability. These conclusions are shown to be robust to the degree of commodity aggregation.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Research and Monetary Policy Department, Central Bank of the Republic of Turkey in its journal Central Bank Review.
Volume (Year): 4 (2004)
Issue (Month): 2 ()
Contact details of provider:
Postal: Head Office, Istiklal Cad. 10 Ulus, 06100 Ankara
Phone: (90 312) 507 5000
Fax: (90 312) 507 5640
Web page: http://www.tcmb.gov.tr/
More information through EDIRC
Relative Price Variability; Inflation; Turkish Inflation;
Other versions of this item:
- Hande Kucuk & Burc Tuger, 2004. "Relative Price Variability : The Case Of Turkey 1994-2002," Working Papers 0402, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Parks, Richard W, 1978. "Inflation and Relative Price Variability," Journal of Political Economy, University of Chicago Press, vol. 86(1), pages 79-95, February.
- Scott Roger, 2000. "Relative Prices, Inflation and Core Inflation," IMF Working Papers 00/58, International Monetary Fund.
- Bordo, Michael David, 1980. "The Effects of Monetary Change on Relative Commodity Prices and the Role of Long-Term Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(6), pages 1088-1109, December.
- Taylor, John B., 1981. "On the relation between the variability of inflation and the average inflation rate," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 15(1), pages 57-85, January.
- Marco Rossi & Daniel Leigh, 2002. "Exchange Rate Pass-Through in Turkey," IMF Working Papers 02/204, International Monetary Fund.
- Zvi Hercowitz, 1980.
"Money and the Dispersion of Relative Prices,"
NBER Working Papers
0431, National Bureau of Economic Research, Inc.
- Leiderman, Leonardo, 1993. "Inflation and Disinflation," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226471105, December.
- Barro, Robert J., 1976. "Rational expectations and the role of monetary policy," Journal of Monetary Economics, Elsevier, vol. 2(1), pages 1-32, January.
- Franses, Philip Hans & Haldrup, Niels, 1994. "The Effects of Additive Outliers on Tests for Unit Roots and Cointegration," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(4), pages 471-78, October.
- Stanley Fischer, 1981. "Relative Shocks, Relative Price Variability, and Inflation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 12(2), pages 381-442.
- Cukierman, Alex, 1983. "Relative price variability and inflation: A survey and further results," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 19(1), pages 103-157, January.
- Blejer, Mario I. & Leiderman, Leonardo, 1982. "Inflation and relative-price variability in the open economy," European Economic Review, Elsevier, vol. 18(2), pages 387-402.
- C. Emre Alper & Murat Ucer, 1998. "Some Observations on Turkish Inflation: A ''Random Walk'' Down the Past Decade," Working Papers 1998/02, Bogazici University, Department of Economics.
- Sheshinski, Eytan & Weiss, Yoram, 1977. "Inflation and Costs of Price Adjustment," Review of Economic Studies, Wiley Blackwell, vol. 44(2), pages 287-303, June.
- Vining, Daniel R, Jr & Elwertowski, Thomas C, 1976. "The Relationship between Relative Prices and the General Price Level," American Economic Review, American Economic Association, vol. 66(4), pages 699-708, September.
- Lucas, Robert E, Jr, 1973. "Some International Evidence on Output-Inflation Tradeoffs," American Economic Review, American Economic Association, vol. 63(3), pages 326-34, June.
- Friedman, Milton, 1977. "Nobel Lecture: Inflation and Unemployment," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 451-72, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gulhanim Kayatas).
If references are entirely missing, you can add them using this form.