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Inflation Dynamics and its Sources in the Ottoman Empire: 1586-1913


  • Hakan Berument
  • Asli Gunay


This study examines the dynamics and determinants of inflation in the Ottoman Empire during the 1586-1913 period. There are two possible reasons for inflation: fiscal expansion and monetary expansion, which could be generated through the debasement of local currency (Akce). We used a set of political and structural variables in order to explain the change in inflation dynamics. In particular, we considered the war years, periods of Ottoman history that show different characteristics (the slow-down period, the recession period and the break-up period) and the period of constitutional monarchy. Moreover, we tested whether the inflation process was the same for each sultan and whether each sultan's behavior during the first year was different from the rest of his reign. The empirical evidence reported here suggests that war accelerated inflation as expected and fiscal expansion rather than the debasement of the Akce was the main reason for inflation. Moreover, the slow-down, the recession and the break-up periods affected inflation positively; both fiscal expansion and the debasement of the Akce were seen in these three periods as sources of inflation. While employing different inflationary policies during his reign, each sultan accelerated inflation in the first year of his reign by the debasement of the Akce or by fiscal expansion. Last, the constitutional monarchy period had a significant positive effect on inflation although fiscal expansion, rather than the debasement of the Akce, was the source of inflation during this period.

Suggested Citation

  • Hakan Berument & Asli Gunay, 2007. "Inflation Dynamics and its Sources in the Ottoman Empire: 1586-1913," International Review of Applied Economics, Taylor & Francis Journals, vol. 21(2), pages 207-245.
  • Handle: RePEc:taf:irapec:v:21:y:2007:i:2:p:207-245
    DOI: 10.1080/02692170701189102

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    References listed on IDEAS

    1. Alesina, Alberto & Sachs, Jeffrey, 1988. "Political Parties and the Business Cycle in the United States, 1948-1984," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(1), pages 63-82, February.
    2. Sachs, Jeffrey & Alesina, Alberto, 1988. "Political Parties and the Business Cycle in the United States, 1948-1984," Scholarly Articles 4553026, Harvard University Department of Economics.
    3. repec:cup:apsrev:v:71:y:1977:i:04:p:1467-1487_26 is not listed on IDEAS
    4. Roubini, Nouriel & Alesina, Alberto, 1992. "Political Cycles in OECD Economies," Scholarly Articles 4553025, Harvard University Department of Economics.
    5. Niall Ferguson, 1996. "Constraints and room for manoeuvre in the German inflation of the early 1920s," Economic History Review, Economic History Society, vol. 49(4), pages 635-666, November.
    6. Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
    7. Alberto Alesina & Nouriel Roubini, 1992. "Political Cycles in OECD Economies," Review of Economic Studies, Oxford University Press, vol. 59(4), pages 663-688.
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    More about this item


    Inflation; debasement; fiscal expansion; Ottoman Empire;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General


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