Determinants of Turkish Inflation
The main purpose in this paper is to investigate the determinants of inflationary process in Turkish economy. For this purpose, based on some potential causes of inflation, an empirical model is contructed upon emphasizing the roles of various factors on inflationary process. The results obtained support the view of cost-push inflation led by exchange rate depreciations, wage indexation mechanism, real interest structure and public sector pricing behaviour which is considered some part of wholesale prices, rather than the demand-pull monetary factors. Some other factors such as the course of real effective exchange rate have been found indicating a relieving effect on the cost pressure settled in domestic economy as well. Supporting these arguments, we find that the smaller the growth performance of the economy given the cost-pressure through exchange-rate pass-through effects, wage indexation mechanism and the real interest structure be imposed, the larger would be the inflation structure. These all might also be given as evidence to that the cost-push rather than demand-pull factors would affect the course of Turkish business cycles.
|Date of creation:||2006|
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- Calvo, Guillermo A. & Vegh, Carlos A., 1999.
"Inflation stabilization and bop crises in developing countries,"
Handbook of Macroeconomics,
in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 24, pages 1531-1614
- Guillermo A. Calvo & Carlos A. Vegh, 1999. "Inflation Stabilization and BOP Crises in Developing Countries," NBER Working Papers 6925, National Bureau of Economic Research, Inc.
- Pierre-Richard AgÃ©nor & Alexander W. Hoffmaister, 1997. "Money, Wages and Inflation in Middle-Income Developing Countries," IMF Working Papers 97/174, International Monetary Fund.
- Onis, Ziya & Ozmucur, Suleyman, 1990. "Exchange rates, inflation and money supply in Turkey : Testing the vicious circle hypothesis," Journal of Development Economics, Elsevier, vol. 32(1), pages 133-154, January.
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