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A post-Keynesian-structuralist empirical approach to inflationary pressures in Türkiye

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  • Mutlugün, Betül

Abstract

Inflation in Türkiye surged to nearly 85% in 2022, the highest level in two decades. This study analyzes inflation dynamics through a Post-Keynesian Structuralist framework using a Structural Vector Autoregression model with data from October 2004 to September 2024. The findings reveal that: (i) exchange rate shocks are the primary driver of inflation, with global oil prices also playing a significant role; (ii) unit labor costs contribute minimally as a propagation mechanism due to weakened collective bargaining and the growing productivity-pay gap; (iii) demand-side factors, such as capacity utilization, have limited influence on inflation; and (iv) monetary policy primarily operates through the exchange rate channel, where policy rate hikes lead to currency appreciation but fail to significantly curb aggregate demand. These results underscore the challenges faced by Türkiye’s monetary authorities in addressing inflation driven largely by external shocks and structural economic vulnerabilities.

Suggested Citation

  • Mutlugün, Betül, 2025. "A post-Keynesian-structuralist empirical approach to inflationary pressures in Türkiye," Structural Change and Economic Dynamics, Elsevier, vol. 75(C), pages 744-766.
    • Handle: RePEc:eee:streco:v:75:y:2025:i:c:p:744-766
    DOI: 10.1016/j.strueco.2025.10.004
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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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