Monetary Pressures and Inflation Dynamics in Turkey: Evidence from P-Star Model
This paper uses the P-star model to explain inflation dynamics in Turkey. In P-star models, money plays an important role by determining the price gap, which is postulated to measure the pressure on prices in the economy. This pressure emerges when output is above the potential, interest rate is lower than the natural rate, or there exists some excess money in the economy. The estimation results with the Turkish data show that the price gap does indeed contain considerable information for explaining inflation dynamics. Moreover, the model selection criterion that compares the empirical performance of the P-star model with the New Classical Phillips curve relationship favors the P-star model over the Phillips curve relationship. We conclude that money is efficacious in predicting risk to price stability in Turkey
|Date of creation:||2008|
|Contact details of provider:|| Postal: Head Office, Istiklal Cad. 10 Ulus, 06100 Ankara|
Phone: (90 312) 507 5000
Fax: (90 312) 507 5640
Web page: http://www.tcmb.gov.tr
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Charles Goodhart, 2007. "Whatever became of the Monetary Aggregates?," FMG Special Papers sp172, Financial Markets Group.
- MacKinnon, James G. & White, Halbert & Davidson, Russell, 1983.
"Tests for model specification in the presence of alternative hypotheses : Some further results,"
Journal of Econometrics,
Elsevier, vol. 21(1), pages 53-70, January.
- Russell Davidson & James G. MacKinnon, 1981. "Tests for Model Specification in the Presence of Alternative Hypotheses: Some Further Results," Working Papers 430, Queen's University, Department of Economics.
- Gerlach, Stefan & Svensson, Lars E. O., 2003. "Money and inflation in the euro area: A case for monetary indicators?," Journal of Monetary Economics, Elsevier, vol. 50(8), pages 1649-1672, November.
- Stefan Gerlach & Lars E.O. Svensson, 2000. "Money and Inflation in the Euro Area: A Case for Monetary Indicators?," NBER Working Papers 8025, National Bureau of Economic Research, Inc.
- Gerlach, Stefan & Svensson, Lars E O, 2002. "Money and Inflation in the Euro-Area: A Case for Monetary Indicators?," CEPR Discussion Papers 3392, C.E.P.R. Discussion Papers.
- Lars E.O. Svensson & Stefan Gerlach, 2001. "Money and inflation in the Euro Area: A case for monetary indicators?," BIS Working Papers 98, Bank for International Settlements.
- Ahmad Tashkini, 2006. "The P-star Model in Iran (1960-2005)," Iranian Economic Review, Economics faculty of Tehran university, vol. 11(1), pages 115-122, winter.
- Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
- James H. Stock & Mark W. Watson, 1991. "A simple estimator of cointegrating vectors in higher order integrated systems," Working Paper Series, Macroeconomic Issues 91-3, Federal Reserve Bank of Chicago.
- George Tawadros, 2007. "A structural time series test of the P-star model: evidence from the middle east," Applied Financial Economics, Taylor & Francis Journals, vol. 17(6), pages 463-467.
- Rotemberg, Julio J, 1982. "Sticky Prices in the United States," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1187-1211, December.
- Oomes, Nienke & Ohnsorge, Franziska, 2005. "Money demand and inflation in dollarized economies: The case of Russia," Journal of Comparative Economics, Elsevier, vol. 33(3), pages 462-483, September.
- Franziska L Ohnsorge & Nienke Oomes, 2005. "Money Demand and Inflation in Dollarized Economies; The Case of Russia," IMF Working Papers 05/144, International Monetary Fund.
- Özdemir, K. Azim & Turner, Paul, 2008. "A Monetary Disequilibrium Model for Turkey: Investigation of a Disinflationary Fiscal Rule and its Implications for Monetary Policy," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 349-361.
- K. Azim Ozdemir, 2005. "A Monetary Disequilibrium Model for Turkey : Investigation of a Disinflationary Fiscal Rule and its Implications on Monetary Policy," Working Papers 0507, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- Davidson, Russell & MacKinnon, James G, 1981. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Econometrica, Econometric Society, vol. 49(3), pages 781-793, May.
- Russell Davidson & James G. MacKinnon, 1980. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Working Papers 378, Queen's University, Department of Economics.
- Hallman, Jeffrey J & Porter, Richard D & Small, David H, 1991. "Is the Price Level Tied to the M2 Monetary Aggregate in the Long Run?," American Economic Review, American Economic Association, vol. 81(4), pages 841-858, September.
- Muzafar Shah Habibullah & Peter Smith, 1998. "Modeling Inflation in the Philippines: The P-Star Model Approach," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 35(1), pages 87-96, June. Full references (including those not matched with items on IDEAS)