Inflation, Output Growth, and Stabilization in Turkey, 1980-2002
AbstractUsing a dynamic aggregate supply and aggregate demand model with imperfect capital mobility and structural VARs, we decompose inflation and output movements into those attributable to terms of trade, supply, balance-of-payments, fiscal, and monetary shocks. Empirical results show that terms of trade shocks have a significant negative effect on inflation in the short run. In the long run, monetary, and balance of payments shocks dominate while budget deficits play a limited role in the inflationary process. Demand shocks have limited effects on output movements; output is mostly driven by terms of trade and supply shocks. The results highlight the importance of a credible disinflation program and structural reform that restrain discretionary aggregate demand policies.
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Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0306001.
Length: 33 pages
Date of creation: 04 Jun 2003
Date of revision:
Note: Type of Document - Acrobat Reader/PDF; prepared on PC; to print on any printer; pages: 33 ; figures: included
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Causes and effects of inflation; inflation theories; stabilization policy; theory of aggregate supply and aggregate demand; time series models; Turkish economy;
Other versions of this item:
- Dibooglu, Sel & Kibritcioglu, Aykut, 2004. "Inflation, output growth, and stabilization in Turkey, 1980-2002," Journal of Economics and Business, Elsevier, vol. 56(1), pages 43-61.
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-06-16 (All new papers)
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