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Inflation, Output, and Stabilization in a High Inflation Economy: Turkey, 1980-2000

Author

Listed:
  • Selahattin Dibooglu

    (Southern Illinois Univ. at Carbondale & Univ. of Illinois at Urbana-Champaign)

  • Aykut Kibritcioglu

    (Ankara Univ. & Univ. of Illinois at Urbana-Champaign)

Abstract

This paper surveys and examines the sources of fluctuations in inflation and output in Turkey. Using a dynamic open economy aggregate supply - aggregate demand model with imperfect capital mobility and structural vector-autoregressions, the authors consider real oil price, supply, balance of payments, real demand, and monetary disturbances. Empirical results indicate that inflation is driven by monetary and real demand disturbances while output is mainly driven by aggregate supply disturbances. The historical decomposition shows that a substantial portion of inflation is aggregate demand-driven core inflation. A credible disinflation program accompanied by structural reform is likely to stabilize the economy with little output costs.

Suggested Citation

  • Selahattin Dibooglu & Aykut Kibritcioglu, 2001. "Inflation, Output, and Stabilization in a High Inflation Economy: Turkey, 1980-2000," Macroeconomics 0107003, University Library of Munich, Germany, revised 26 Jul 2001.
    • Handle: RePEc:wpa:wuwpma:0107003
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/0107/0107003.pdf
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    Citations

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    Cited by:

    1. Kibritçioğlu, Aykut, 2002. "Causes of Inflation in Turkey: A Literature Survey with Special Reference to Theories of Inflation," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 43-76.
    2. Mariano Roberto S & Gultekin Bulent N & Ozmucur Suleyman & Shabbir Tayyeb & Alper C. Emre, 2004. "Prediction of Currency Crises: Case of Turkey," Review of Middle East Economics and Finance, De Gruyter, vol. 2(2), pages 1-21, August.
    3. Malik, M. Fahad & Awan, Dr Masood Sarwar & Malik, Dr Waseem Shahid, 2020. "Macroeconomic Shocks: Short-Run versus Long-Run Perspectives," MPRA Paper 99103, University Library of Munich, Germany.

    More about this item

    Keywords

    Stabilization Policy - Turkey; Inflation- Causes and Effects; Inflation Theories; Turkey- Macroeconomic Developments; Macroeconomics - Theory of Aggregate Supply and Aggregate Demand; Time Series Models;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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