In this paper, Turkish high and persistent inflation experience and its impact on inflation uncertainty and growth have been investigated. GARCH models are used to generate a measure of inflation uncertainty and quarterly data covers the period of 1987:1-2003:3. According to the results from this study, inflation and inflation uncertainty are of negative impacts on growth in Turkey in the analyzed period. However, inflation uncertainty has much more negative effect on growth in comparison with inflation. In other words, while 1% increase in inflation rate decrease growth 0.56%, an 1% increase in inflation uncertainty diminishes growth 3.95%.
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Paper provided by Turkish Economic Association in its series Working Papers with number
2006/14.
Find related papers by JEL classification: E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables