The Inflation Dynamics of the Turkish Economy in 1990-2011 Period

Ari, Ali and Yılmaz, Ahmet and Cergibozan, Raif and Ozcan, Yunus (2013): The Inflation Dynamics of the Turkish Economy in 1990-2011 Period. Published in: Journal of Financial Researches and Studies , Vol. 5, No. 9 (July 2013): pp. 1-16.

Abstract

In 2004, Turkey managed to reduce the chronic high inflation rates that characterized its economy over the period 1975-2001 to single digits, thanks to economic policies implemented in the aftermath of the 2001 financial crisis. This paper analyzes inflation dynamics in the Turkish economy both in the short- and the long-run, over the period from January 1990 to December 2011 by using the Johansen Cointegration Test and the Vector Error Correction model (VEC). Empirical results show that the inflation rates in Turkey are mainly related to changes in money supply, economic growth, nominal exchange rates, dollarization and real wages.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inflation, Turkish Economy, Johansen Cointegration, Vector Error Correction, Impulse-Response Functions
• 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; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E51 - Money Supply ; Credit ; Money Multipliers; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy

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