Factors influencing relative price of goods and services sectors in Turkey: An econometric analysis

Kıvılcım Meti̇n-Özcan and Koray Kalafatcılar ()
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Kıvılcım Meti̇n-Özcan: Bilkent Üniversitesi
Authors registered in the RePEc Author Service: Kivilcim Metin Özcan

Iktisat Isletme ve Finans, 2009, vol. 24, issue 285, 48-72

Abstract: Upon difficulties faced by the Central Bank of Turkey (CBT) in attaining inflation targets, diverging movements in goods and services sectors prices, two components of the CPI basket, have drawn particular attention. However, studies on this issue have remained rather limited in developing as well as advanced countries. The present study is an attempt, despite limited availability of studies in the relevant literature and scant data relating to the sector of services, to clarify the issue by a VEC model. Relative price movements were explained by economic factors including inter-sectoral productivity differences, transmission from exchange rate, exposure to global competition and higher income elasticity of services sector. Our empirical study concluded that there is a long-term relationship between relative price series and economic factors recognized in literature. It was found that exchange rate and differences in productivity levels have significant share in accounting for relative price movements.

Keywords: Services Sector; Relative Prices; Time Series Models (search for similar items in EconPapers)
JEL-codes: C32 E31 (search for similar items in EconPapers)
Date: 2009
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Working Paper: Factors Influencing Relative Price of Goods and Services Sectors in Turkey: An Econometric Analysis (2009)
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