Investigating the Time Varying Nature of the Link between Inflation and Currency Substitution in the Turkish Economy

Ayşen Araç (), Funda Telatar () and Erdinc Telatar

No 20122, Hacettepe University Department of Economics Working Papers from Hacettepe University, Department of Economics

Abstract: This study investigates the relationship between the rate of inflation and the degree of the currency substitution for Turkey during 1986-2006. Our results show that the correlation coefficient between the two variables has not been constant over time. The results of the Multivariate GARCH model estimated to obtain the correlation coefficients indicate that there is a nonlinear relationship between the inflation rate and the degree of currency substitution. The main policy implication of our study is that it is difficult to stop or to reverse the currency substitution unless a confidence in the domestic currency is established.

Keywords: Currency substitution; M-GARCH (search for similar items in EconPapers)
JEL-codes: C32 F31 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2012
New Economics Papers: this item is included in nep-ara and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.iktisat.hacettepe.edu.tr/WP/WP-2012-2.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www.iktisat.hacettepe.edu.tr:80 (No such host is known. )

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hac:hacwop:20122

Access Statistics for this paper

More papers in Hacettepe University Department of Economics Working Papers from Hacettepe University, Department of Economics Hacettepe University, Faculty of Economics and Administrative Sciences, Department of Economics, Ankara, Turkey. Contact information at EDIRC.
Bibliographic data for series maintained by Aysen Arac ().