An empirical analysis of Turkish inflation (1988-2004): some non-monetarist estimations

Levent, Korap (2006): An empirical analysis of Turkish inflation (1988-2004): some non-monetarist estimations. Published in: Erciyes Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi , Vol. 26, No. Ocak-Haziran (2006): pp. 83-101.

Abstract

The main purpose in this paper is to investigate the determinants of the inflationary process in the Turkish economy. For this purpose, based on a some potential consequential reasons, a vast literature is tried to be investigated on the Turkish inflation, and a model attempt on inflation phenomenon is estimated. The results obtained support the view of cost-push inflation. Also the factors resulting from public sector pricing behavior and also the price inertia phenomenon are estimated as the other main sources of inflationary process under the estimation period 1988-2004, rather than the demand-pull monetary factors.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inflation ; Turkish Economy ; Var Modelling
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation

References

AGENOR, Pierre Richard and Alexander W. HOFFMAISTER (1997), “Money, Wages and Inflation in Middle Income Developing Countries”, IMF Working Paper, 97/174, December.

AKAT, A. Savaş (2000), “The Political Economy of Turkish Inflation”, Journal of International Affairs, 54/1, 265-82.

AKÇAY, Belgin (1997), “Rational Expectations Model of Inflation for Turkey”, Dokuz Eylül Üniversitesi İ.İ.B.F. Dergisi, 12/2, 49-64.

AKÇAY, O. Cevdet, ALPER C. Emre and Süleyman ÖZMUCUR (1997), “Budget Deficit, Money Supply and Inflation: Evidence from Low and High Frequency Data for Turkey”, Boğaziçi University SBE Discussion Paper, 97/10.

AKÇAY, O.Cevdet, ALPER, C. Emre and Süleyman ÖZMUCUR (2001), “Budget Deficit, Inflation and Debt Sustainability: Evidence from Turkey (1970-2000)”, in KİBRİTÇİOĞLU, Aykut, RITTENBERG, Libby and Faruk Selçuk (eds.), Inflation and Disinflation in Turkey, Ashgate Publishing Limited, 77-96.

AKYÜREK, Cem (1999), “An Empirical Analysis of Post-Liberalization Inflation in Turkey”, Yapı Kredi Economic Review, 10/2, December, 31-53. ALPER, C. Emre and Murat ÜÇER (1998), “Some Observations on Turkish Inflation: A “Random Walk” Down the Past Decade”, Boğaziçi Journal, 12/1, 7-38.

ANAND, Ritu and Sweder van WIJNBERGEN (1989), “Inflation and the Financing of Government Expenditure: An Introductory Analysis with an Application to Turkey”, The World Bank Economic Review, 3/1, 17-38.

ARESTIS, Philip (1992), The Post-Keynesian Approach to Economics, Edward Elgar Publishing.

BAHMANI-OSKOOEE, M. and İlker DOMAÇ (2003), “On the Link Between Dollarization and Inflation: Evidence from Turkey”, Comparative Economic Studies, 45, 306-28.

BEGG, David, FISCHER, Stanley and Rudiger DORNBUSCH (1994), Economics, Fourth Ed., 1994.

BRUNO, Michael and Stanley FISCHER (1986), “The Inflationary Process in Israel: Shocks and Accommodation”, NBER Working Paper, No. 1483.

CALVO, Guillermo A. and Carlos A VEGH (1999), “Inflation Stabilization and BOP Crisis in Developing Countries”, NBER Working Paper, 6925.

CBRT (2002), Para Politikası Raporu, April.

CELASUN, Oya, GELOS R. Gaston and Alessandro PRATTİ (2003), “Would Cold Turkey Work in Turkey?”, IMF Working Paper, 03/49.

CİZRE SAKALLIOĞLU, Ümit and Erinç YELDAN (1999), “Dynamics of Macroeconomic Disequilibrium and Inflation in Turkey: The State, Politics, and The Markets under a Globalized Developing Economy”, Bilkent University Department of Economics Working Paper, 99/10.

DAVIDSON, Paul (1994), Post Keynesian Macroeconomic Theory, Edward Elgar Publishing.

DİBOOĞLU, Selahattin and Aykut KİBRİTÇİOĞLU (2001), “Inflation, Output and Stabilization in a High Inflation Economy: Turkey, 1980-2000”, University of Illinois at Urbana-Champaign, College of Commerce and Business Administration, Office of Research Working Paper, 01/0112.

DICKEY, David A. and A.Wayne FULLER (1979), “Distribution of the Estimators for Autoregressive Time Series with A Unit Root”, Journal of American Statistical Association, Volume 74, Number 366, June, 427-431.

DICKEY, David A., JANSEN, Dennis W. and L. Daniel THORNTON (1991), “A Primer on Cointegration with an Application to Money and Income”, Federal Reserve Bank of St. Louis Review, March/April, 58-78.

DOMAÇ, İlker (2004), “Explaining and Forcasting Inflation in Turkey”, World Bank Policy Research Working Paper, 3287, April.

DORNBUSCH, Rudiger and Stanley FISCHER (1993), “Moderate Inflation”, The World Bank Economic Review, 7/1, 1-44.

ENGLE, Robert F. and C.W.J GRANGER (1987), “Cointegration and Error Correction: Representation, Estimation and Testing”, Econometrica, 55/2, March, 251-276.

ERLAT, Haluk (2001), “Long Memory in Turkish Inflation Rates”, Paper Presented at the 21st Annual Conference of the Middle East Economics Association, New Orleans, January, 5-7.

EROL, Turan and Sweder van WIJNBERGEN (1997), “Real Exchange Rate Targeting and Inflation in Turkey: An Empirical Analysis with Policy Credibility”, World Development, 25/10, 1717-1730.

EROL, Turan (1997), “Nominal Anchors of the Turkish Economy: Evidence from a VAR Model”, METU Studies in Development, 24/3, 363-382.

ERSEL, Nesrin and Aysu İNSEL (1993), “Türkiye’de Kronik Enflasyon Süreci ve Antienflasyonist Politikaların Etkinliği 1981-1991”, ODTÜ Gelişme Dergisi, 20/3, 299-312.

FİSUNOĞLU, H. Mahir and H. Altan ÇABUK (1998), “Düşük Oranlı ve Sürekli Kur Ayarlamalarının Enflasyon Üzerindeki Etkisi”, ODTÜ Gelişme Dergisi, 25/2, 297-309.

FRIEDMAN, Milton (1956), “The Quantity Theory of Money – A Restatement”, in M. Friedman (ed.), Studies in the Quantity Theory of Money, The University of Chicago Press, 3-21.

FRIEDMAN, Milton (1968), “The Role of Monetary Policy”, American Economic Review, 58, 1-7.

FRY, Maxwell J. (1980), “Money, Interest, Inflation and Growth in Turkey”, Journal of Monetary Economics, 6, 535-545.

FRY, Maxwel J. (1986), “Turkey’s Great Inflation”, METU Studies in Development, 13/1-2, 117-134.

GAZİOĞLU, Şaziye (1986), “Government Deficits, Consumption and Inflation in Turkey”, METU Studies in Development, 13/1-2, 117-134.

GONZALO, Jesus (1994), “Five Alternative Methods of Estimating Long - Run Equilibrium Relationships”, Journal of Econometrics, 60, 203-233.

GRANGER, C.W.J. and Paul NEWBOLD ( 1974), “Spurious Regressions in Economics”, Journal of Econometrics, 2/2, 111-120.

GÜNÇAVDI, Öner, LEVENT, Haluk ve Burç ÜLENGİN (2000), “Yüksek ve Değişken Enflasyonun Tahmininde Alternatif Modellerin Karşılaştırılması: Türkiye Örneği”, ODTÜ Gelişme Dergisi, 27/1-2, 149-171.

GÜNÇAVDI, Öner and Burç ÜLENGİN (2001), “Financial Crisis and Inflationary Dynamics in Turkey”, Istanbul Technical University Faculty of Management Discussion Papers in Management Engineering, 01/15.

INTERNATIONAL MONETARY FUND (2005), World Economic Outlook, April.

JOHANSEN, Sǿren (1991), “Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models”, Econometrica, 59, 1551-1580.

JOHANSEN, Sǿren (1995), Likelihood-based Inference in Cointegrated Vector Autoregressive Models, Oxford University Press.

KALIN, Ahmet S. (1989), Enflasyon Analitik Bir Yaklaşım, Filiz Kitabevi, İstanbul.

KORU, Ayça Tekin and Erdal ÖZMEN (2003), “Budget Deficits, Money Growth and Inflation: the Turkish Evidence”, Applied Economics, 35/5, 591-596.

LAVOIE, Marc (1992), Foundations of Post-Keynesian Economic Analysis, Edward Elgar Publishing.

LEIGH, Daniel and Marco ROSSI (2002), “Exchange Rate Pass-Through in Turkey”, IMF Working Paper, 02/204.

LIM, Cheng Hoon and Laura PAPI (1997), “An Econometric Analysis of the Determinants of Inflation in Turkey”, IMF Working Paper, 97/170.

MACKINNON, J.G. (1996), “Numerical Distribution Functions for Unit Root and Cointegration Tests”, Journal of Applied Econometrics, 11, 601-618.

METİN, Kıvılcım (1995), The Analysis of Inflation: The Case of Turkey (1948 - 1988), Sermaye Piyasası Kurulu yayını, No. 20.

METİN, Kıvılcım (1998), “The Relationship Between Inflation and the Budget Deficit in Turkey”, Journal of Business & Economic Statistics, 16/4, 412-422.

METİN-ÖZCAN, Kıvılcım, VOYVODA, Ebru and Erinç YELDAN (2000), “On the Patterns of Trade Liberalization, Oligopolistic Concentration and Profitability: Reflections from Post-1980 Turkish Manufacturing”, Paper Presented at the IVth Annual METU Conference on Economics, Ankara, September, 2000

MONTIEL, Peter J. (1989), “Empirical Analysis of High-Inflation Episodes in Argentina, Brazil, and Israel”, IMF Staff Papers, 36/3, 527-549.

ONGAN, Hakan (2003), “Türkiye’de Enflasyon ve Devalüasyon İlişkisi”, İ.Ü. İkt. Fak. Mecmuası, 53/2, 87-100.

ÖNİŞ, Ziya and Süleyman ÖZMUCUR (1990), “Exchange Rates, Inflation and Money Supply in Turkey: Testing the Vicious Circle Hypothesis”, Journal of Development Economics, 32/1, 133-154.

ÖZATAY, Fatih (1992), “The Role of Public Sector Prices in Price Dynamics in Turkey”, in H. Ersel (ed.), Price Dynamics Papers Presented at a Workshop Held in Antalya, Turkey on May 7-10,1990, Ankara: CBRT, December, 33-69.

ÖZATAY, Fatih (1996), “The Lessons From the 1994 Crisis in Turkey: Public Debt (Mis)management and Confidence Crisis”, Yapı Kredi Economic Review, 7/1, 21-38.

ÖZATAY, Fatih (1999), “The 1994 Currency Crisis in Turkey”, Journal of Policy Reform, 3/4, 327-352.

PAYA, Merih (1998), Para Teorisi ve Para Politikası, Filiz Kitabevi, İstanbul.

PHELPS, Edmund S. (1973), “Inflation and the Theory of Public Finance”, Swedish Journal of Economics, 75/1, 67-82.

RITTENBERG, Libby (1993), “Exchange Rate Policy and Price Level Changes: Causality Tests for Turkey in the Post Liberalization Period”, The Journal of Development Studies, 29/2, 245-259.

RODRIK, Dani (1990), “Premature Libaralization, Incomplete Stabilization: The Özal Decade in Turkey”, NBER Working Paper, No. 3300, March.

SARGENT, Thomas J. and Neil WALLACE (1981), “Some Unpleasant Monetarist Arithmetic”, FRB of Minneapolis Quarterly Review, 5/3, 1-17.

SIMS, Christopher A., STOCK, James H. and Mark W. WATSON, (1990), “Inference in Linear Time Series Models With Some Unit Roots”, Econometrica, 58/1, 113-144.

TOGAN, Sübidey (1987), “The Influence of Money and the Rate of Interest on the Rate of Inflation in a Financially Repressed Economy: The Case of Turkey”, Applied Economics, 19, 1585-1601.

UYGUR, Ercan (1992), “Price, Output and Investment Decisions of Firms: An Explanation of Inflation and Growth in Turkish Industry”, in H. Ersel (ed.), Price Dynamics: Papers Presented at a Workshop Held in Antalya, Turkey on May 7-10, Ankara: CBRT, December, 1-31.

YAVUZ ÇİL, Nilgün (2003), “Durağanlık ve Koentegrasyon Analizi Çerçevesinde Kamu Açığı ve Finansmanı Açısından Enflasyon Modelinin Tahmini (1982-2001)”, İ.Ü. İkt. Fak. Mecmuası, 53/2, 101-117.

YELDAN, Erinç (2002), Küreselleşme Sürecinde Türkiye Ekonomisi: Bölüşüm, Birikim ve Büyüme, Altıncı Baskı, İletişim Yayınları, İstanbul.