Exchange Rate Pass-Through in Turkey : It is Slow, but is it Really Low?
AbstractUsing a vector auto-regression (VAR) setup, we estimate the pass-through from exchange rates and import prices to domestic inflation in Turkey, and produce some stylized facts regarding the degree and the adjustment speed of the pass-through on several price measures. Estimations for two distinct periods-before and after the adoption of floating exchange rate regime-yield both good and bad news. The good news is, our impulse responses confirm the common conjecture that pass-through has weakened and slowed down after the adoption of floating exchange rate regime. The bad news is, surprisingly low pass-through in recent years partly owes to the fact that exchange rate shocks were not persistent in direction. In other words, total pass-through might have been sizable had the economy been hit by one-sided shocks such as a persistent depreciation.
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Bibliographic InfoPaper provided by Research and Monetary Policy Department, Central Bank of the Republic of Turkey in its series Working Papers with number 0510.
Date of creation: 2005
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-01-01 (All new papers)
- NEP-CWA-2006-01-01 (Central & Western Asia)
- NEP-IFN-2006-01-01 (International Finance)
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