Do Exchange Rates Affect Inflation? Evidence from Emerging Market Economies

Baki Demirel (), Baris Alpaslan () and Emre Guneser Bozdag ()
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Baki Demirel: University of Gaziosmanpasa, Faculty of Economics and Administrative Sciences, Economics
Baris Alpaslan: University of Manchester, School of Social Sciences, Economics
Emre Guneser Bozdag: University of Gazi, Faculty of Economics and Administrative Sciences, Economics

Koç University-TUSIAD Economic Research Forum Working Papers from Koc University-TUSIAD Economic Research Forum

Abstract: After 1980s, chronic inflation in Turkey has shaken the confidence in the domestic currency, and thus operating debit-credit transactions through dollars. The aim of this study is to analyse the impact of exchange rate pass-through into inflation in both Turkey and emerging market economies that were highly dollarized and shifted to a flexible exchange rate regime, together with inflation targeting policy in an attempt to switch to the advanced economy, and to examine whether stabilization programs under flexible exchange rate regimes and particularly inflation targeting policy may eliminate dollarization in the periods 1995-2001 and 2002-2010.

Keywords: De-Dollarization; Inflation Targeting; Exhange Rate Pass-Through (search for similar items in EconPapers)
JEL-codes: E42 E52 E58 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2013-09
New Economics Papers: this item is included in nep-ara, nep-cba, nep-cwa, nep-mac and nep-mon
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