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Capacity Utilization and Inflation in Turkey

Author

Listed:
  • Sakarya, Burchan
  • Yurtoglu, Hasan

Abstract

Capacity utilization is an important measure of resource use and economic activity concerning the real side of the economy. Hence, there has to be a relation between the capacity utilization rate and the inflation rate in line with the Phillips curve concept. Moreover, the long term inflation forecasting appears to be a central concern for the policy makers. Thus, alternative approaches other than utilizing monetary aggregates gained importance, particularly the use of NAICU (Non-accelerating Inflation Rate of Capacity Utilization). Accordingly, this paper examines the validity of this relation for the Turkish economy, and develops alternative models for the estimation of NAICU using several capacity utilization and inflation rates, and assesses the robustness of the results.

Suggested Citation

  • Sakarya, Burchan & Yurtoglu, Hasan, 2000. "Capacity Utilization and Inflation in Turkey," MPRA Paper 69192, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:69192
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    References listed on IDEAS

    as
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    3. Chih-Ping Chang & Kenneth M. Emery, 1997. "Is there a stable relationship between capacity utilization and inflation?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q I, pages 14-20.
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    More about this item

    Keywords

    Inflation; Capacity utilization;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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