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A regional analysis of inflation dynamics in Turkey

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  • Filiz Yesilyurt
  • J. Elhorst

Abstract

A hybrid new Keynesian Phillips curve is estimated with spatial interaction effects among the dependent and the independent variables using data of 67 provinces across Turkey over the period 1987–2001. In contrast to previous studies, backward-looking behavior appears to be more or equally important than forward looking behavior. Furthermore, when the impact of this behavior is split up into a direct effect on the own province and an indirect effect on neighboring provinces, which due to employing a spatial econometric approach is possible, we find significant evidence in favor of convergence. This is an important finding since it corroborates a process of regional integration of inflation rates across Turkey, which is a precondition in the accession process of Turkey to the European Union. Copyright Springer-Verlag Berlin Heidelberg 2014

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  • Filiz Yesilyurt & J. Elhorst, 2014. "A regional analysis of inflation dynamics in Turkey," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(1), pages 1-17, January.
    • Handle: RePEc:spr:anresc:v:52:y:2014:i:1:p:1-17
    DOI: 10.1007/s00168-013-0570-4
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    Cited by:

    1. Hasan Engin Duran, 2015. "Regional Inflation Convergence In Turkey," Working Papers 2015/10, Turkish Economic Association.
    2. Tarek Kacemi & Sallahuddin Hassan, 2018. "Inflation dynamics analysis in selected MENA countries," Pakistan Journal of Humanities and Social Sciences, International Research Alliance for Sustainable Development (iRASD), vol. 6(2), pages :160-168, June.
    3. , Aisdl, 2021. "Factors Determining the Development of Minimum Comparable Areas and Spatial Interaction," OSF Preprints 9e7xz, Center for Open Science.
    4. Hakan Yilmazkuday, 2013. "Inflation targeting, flexible exchange rates and inflation convergence," Applied Economics, Taylor & Francis Journals, vol. 45(5), pages 593-603, February.
    5. Nagayasu, Jun, 2014. "Regional inflation, spatial location and the Balassa-Samuelson effect," MPRA Paper 59220, University Library of Munich, Germany.
    6. Mustafa Kiziltan & Ahmet Burcin Yereli, 2023. "Evaluating local fiscal capacity and fiscal effort of Turkish local governments: Evidence from spatial panel data analysis," Economic Change and Restructuring, Springer, vol. 56(1), pages 441-472, February.
    7. Menggen Chen, 2021. "Sub-National PPPs Based on House and Real Income Disparity across China: a Distinctive Spatial Deflator," The Journal of Real Estate Finance and Economics, Springer, vol. 62(2), pages 187-219, February.
    8. 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.
    9. Kabukçuoğlu, Ayşe & Martínez-García, Enrique, 2018. "Inflation as a global phenomenon—Some implications for inflation modeling and forecasting," Journal of Economic Dynamics and Control, Elsevier, vol. 87(C), pages 46-73.
    10. Gayaker, Savas & Ağaslan, Erkan & Alkan, Buket & Çiçek, Serkan, 2021. "The deterioration in credibility, destabilization of exchange rate and the rise in exchange rate pass-through in Turkey," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 571-587.
    11. Inozemtsev, E. & Krotova, Yu., 2024. "Phillips curve with spatial effects based on Russian regional data," Journal of the New Economic Association, New Economic Association, vol. 63(2), pages 35-56.
    12. Badi H. Baltagi & Junjie Shu, 2024. "A Survey of Spatial Unit Roots," Mathematics, MDPI, vol. 12(7), pages 1-31, March.
    13. Nagayasu, Jun, 2017. "Inflation and consumption of nontradable goods: Global implications from regional analyses," International Review of Economics & Finance, Elsevier, vol. 48(C), pages 478-491.
    14. Harry Aginta, 2022. "Spatiotemporal analysis of regional inflation in an emerging country: The case of Indonesia," Regional Science Policy & Practice, Wiley Blackwell, vol. 14(3), pages 667-688, June.
    15. Burhan Can Karahasan, 2014. "The Spatial Distribution Of New Firms:Can Peripheral Areas Escape From The Curse Of Remoteness?," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 8(2), pages 1-28, DECEMBER.
    16. Harry Aginta, 2024. "Inflation and Spatial Spillovers in a Large Archipelago: Evidence from Indonesia," Economic Papers, The Economic Society of Australia, vol. 43(1), pages 91-103, March.
    17. Jun Nagayasu, 2017. "Regional inflation, spatial locations and the Balassa-Samuelson effect: Evidence from Japan," Urban Studies, Urban Studies Journal Limited, vol. 54(6), pages 1482-1499, May.
    18. Hasan Engin Duran & Burak Dindaroğlu, 2021. "Regional inflation persistence in Turkey," Growth and Change, Wiley Blackwell, vol. 52(1), pages 460-491, March.
    19. Girum Dagnachew Abate & Niels Haldrup, 2017. "Space-time modeling of electricity spot prices," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
    20. Harry Aginta & Masakazu Someya, 2022. "Regional economic structure and heterogeneous effects of monetary policy: evidence from Indonesian provinces," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 11(1), pages 1-25, December.

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    More about this item

    Keywords

    C21; E31; R10;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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