Relative Price Variability and the Philips Curve: Evidence from Turkey
AbstractWe argue that relative price changes are a key component of the Phillips curve relationship between inflation and output. Building on work by Ball and Mankiw, we propose including measures of the variances and skewness of relative price adjustment in an otherwise standard model of the Phillips curve. We examine the case of Turkey, where distribution of price changes is especially skewed and where the existence of a Phillips curve has been questioned. We have two main findings: (i) inclusion of measures of the distribution of relative price changes improves our understanding of the Phillips curve trade-off; (ii) there is no evidence of such a trade-off if these measures are not included.
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 InfoPaper provided by Ege University, Department of Economics in its series Working Papers with number 0807.
Length: 26 pages
Date of creation: Jul 2008
Date of revision:
Inflation; Philips Curve; Cross-Sectional Moments of Inflation; Relative Price Variability.;
Other versions of this item:
- Christopher Martin & A. Nazif Çatik & A. Özlem Onder, 2011. "Relative price variability and the Phillips Curve: evidence from Turkey," Journal of Economic Studies, Emerald Group Publishing, vol. 38(5), pages 546-561, November.
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-07-30 (All new papers)
- NEP-CBA-2008-07-30 (Central Banking)
- NEP-CWA-2008-07-30 (Central & Western Asia)
- NEP-MAC-2008-07-30 (Macroeconomics)
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.:
- Özlem Önder, 2006.
"The Stability Of The Turkish Phillips Curve And Alternative Regime Shifting Models,"
0602, Ege University, Department of Economics.
- A. Ozlem Onder, 2009. "The stability of the Turkish Phillips curve and alternative regime shifting models," Applied Economics, Taylor & Francis Journals, vol. 41(20), pages 2597-2604.
- Holly, Sean, 1997. "Relative Price Dispersion and the Rate of Inflation: The Evidence from Japan," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 12, pages 206-226.
- Debelle, Guy & Lamont, Owen, 1997.
"Relative Price Variability and Inflation: Evidence from U.S. Cities,"
Journal of Political Economy,
University of Chicago Press, vol. 105(1), pages 132-52, February.
- Guy Debelle & Owen Lamont, 1996. "Relative Price Variability and Inflation: Evidence from US Cities," NBER Working Papers 5627, National Bureau of Economic Research, Inc.
- Richard De Abreu Lourenco & David Gruen, 1995. "Price Stickiness and Inflation," RBA Research Discussion Papers rdp9502, Reserve Bank of Australia.
- Jörg Döpke & Christian Pierdzioch, 2003.
"Inflation and the Skewness of the Distribution of Relative Price Changes - Empirical Evidence for Germany,"
Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik),
Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 223(2), pages 136-158.
- Jörg Döpke & Christian Pierdzioch, 2001. "Inflation and the Skewness of the Distribution of Relative Price Changes: Empirical Evidence for Germany," Kiel Working Papers 1059, Kiel Institute for the World Economy.
- A. Özlem Önder, 2004. "Forecasting Inflation in Emerging Markets by Using the Phillips Curve and Alternative Time Series Models," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 40(2), pages 71-82, March.
- Hasanov, Mübariz & Araç, Aysen & Telatar, Funda, 2010.
"Nonlinearity and structural stability in the Phillips curve: Evidence from Turkey,"
Elsevier, vol. 27(5), pages 1103-1115, September.
- Mubariz Hasanov & Aysen Arac & Funda Telatar, 2012. "Nonlinearity and Structural Stability in the Phillips Curve: Evidence from Turkey," Hacettepe University Department of Economics Working Papers 20123, Hacettepe University, Department of Economics.
- Helder Ferreira de Mendonça, 2009. "Output-inflation and unemployment-inflation trade-offs under inflation targeting: Evidence from Brazil," Journal of Economic Studies, Emerald Group Publishing, vol. 36(1), pages 66-82, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Baris Gök).
If references are entirely missing, you can add them using this form.