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Inflation Dynamics in Turkey : In Pursuit of a Domestic Cost Measure

  • Selen Baser
  • Hande Kucuk
  • Fethi Ogunc

[EN] We provide Bayesian estimates of the hybrid New Keynesian Phillips Curve (NKPC) to explain the dynamics of the consumer price inflation in Turkey, focusing particularly on the domestic component of the real marginal cost. We find that the baseline model which uses current and lagged values of the output gap as a measure of the domestic real marginal cost does a better job at accounting for the consumer price inflation in Turkey compared to alternative models which incorporate the unit labor cost. On the other hand, estimations of the hybrid NKPC for the services inflation point to the importance of the unit labor cost for the inflation dynamics in this sector. [TR] Bu calismada Bayesci yontemler kullanilarak Turkiye icin Yeni Keynesci Phillips Egrisi (NKPC) tahminleri elde edilmekte ; ozellikle yurt ici kaynakli maliyet baskilarinin enflasyon uzerindeki etkileri uzerinde durulmaktadir. Yurt ici reel marjinal maliyet olcutu olarak cikti acigini kullanan baz modelin, reel birim ucret serilerini iceren alternatif modellere gore TUFE enflasyonunu aciklamakta daha basarili oldugu bulunmustur. Diger taraftan, hizmet enflasyonu icin yapilan NKPC tahminleri, reel birim ucretlerin bu sektordeki enflasyon dinamikleri uzerinde onemli rol oynadigini gostermektedir.

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File URL: http://www.tcmb.gov.tr/wps/wcm/connect/b214db59-9f59-4370-b5ae-109e624f6fe9/EN1311.pdf?MOD=AJPERES&CACHEID=b214db59-9f59-4370-b5ae-109e624f6fe9
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Paper provided by Research and Monetary Policy Department, Central Bank of the Republic of Turkey in its series CBT Research Notes in Economics with number 1311.

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Date of creation: 2013
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Handle: RePEc:tcb:econot:1311
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  1. McCallum, Bennett T & Nelson, Edward, 2001. "Monetary Policy for an Open Economy: An Alternative Framework with Optimizing Agents and Sticky Prices," CEPR Discussion Papers 2756, C.E.P.R. Discussion Papers.
  2. Matthes, Christian & Wang, Mu-Chun, 2012. "What drives inflation in New Keynesian models?," Economics Letters, Elsevier, vol. 114(3), pages 338-342.
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  6. Jeremy Rudd & Karl Whelan, 2007. "Modeling Inflation Dynamics: A Critical Review of Recent Research," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(s1), pages 155-170, 02.
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  8. Sungbae An & Frank Schorfheide, 2006. "Bayesian analysis of DSGE models," Working Papers 06-5, Federal Reserve Bank of Philadelphia.
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  10. Svensson, Lars E.O., 1998. "Open-Economy Inflation Targeting," Seminar Papers 638, Stockholm University, Institute for International Economic Studies.
  11. Galí, Jordi & Gertler, Mark, 1999. "Inflation Dynamics: A Structural Economic Analysis," CEPR Discussion Papers 2246, C.E.P.R. Discussion Papers.
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  13. Borek Vasícek, 2009. "Inflation dynamics and the New Keynesian Phillips curve in EU-4," Working Papers wpdea0912, Department of Applied Economics at Universitat Autonoma of Barcelona.
  14. Rabanal, Pau & Rubio-Ramirez, Juan F., 2005. "Comparing New Keynesian models of the business cycle: A Bayesian approach," Journal of Monetary Economics, Elsevier, vol. 52(6), pages 1151-1166, September.
  15. Planas, Christophe & Rossi, Alessandro & Fiorentini, Gabriele, 2008. "Bayesian Analysis of the Output Gap," Journal of Business & Economic Statistics, American Statistical Association, vol. 26, pages 18-32, January.
  16. Yusuf Soner Baskaya & Eda Gulsen & Hakan Kara, 2012. "Inflation Expectations and Central Bank Communication in Turkey," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 12(2), pages 1-10.
  17. Ercan KARADAŞ & Defne MUTLUER & Yasemin BARLAS ÖZER & Cevriye AYSOY, 2008. "Türkiye’de imalat sanayindeki firmaların fiyatlama davranışı," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 23(268), pages 7-34.
  18. Luis F. Céspedes & Marcelo Ochoa & Claudio Soto, 2005. "The New Keynesian Phillips Curve in an Emerging Market Economy: The Case of Chile," Working Papers Central Bank of Chile 355, Central Bank of Chile.
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  20. Yazgan M. Ege & Yilmazkuday Hakan, 2005. "Inflation Dynamics of Turkey: A Structural Estimation," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 9(1), pages 1-15, March.
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