Velocity Effect On Inflationary Growth of Turkey: Evidence From Co-integration Analysis and Granger's Causality Test
AbstractThe Turkish economy has experienced high and persistent inflation rates in the last two decades. This inflation has persisted despite many unsuccessful stabilization policies, which have caused volatility in macro-economic indicators. The main aim of this paper is to analyze the impact of velocity on inflationary trend in Turkey over the period between 1996 and 2001. We assumed that there is a direct relationship between the two factors. However, velocity is not the major cause of inflation. The integration and co-integration tests have been adopted on monthly time series data to test the validity of the model by adding some control variables. Results show that velocity has a weak and negative effect on the inflationary growth of Turkey during this period. The effects of other control variables on inflation growth have also been tested. Some aspects of this linear relationship have been obtained by Granger’s Causality Test.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 259.
Date of creation: 2002
Date of revision:
Publication status: Published in The Indian Economic Journal 1.50(2002): pp. 48-54
Velocity; Co-Integration Tests; Error Correction Mechanism; Granger’s Test;
Find related papers by JEL classification:
- E0 - Macroeconomics and Monetary Economics - - General
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
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