Household Level Inflation Rates and Inflation Inequality in Turkey

Ugur Akkoc and Burca Kizilirmak
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Ugur Akkoc: Pamukkale University
Burca Kizilirmak: Ankara University

Business and Economics Research Journal, 2021, vol. 12, issue 1, 17-32

Abstract: This paper aims to explore the distribution of inflation rates at the household level and estimate their determinants using the Household Budget Surveys. It derives the household level inflation rates using the democratic price index and analyzes inflation inequality and its persistency. The main contributions of the paper are as follows: (i) to determine inflation inequality by examining the distribution of household-specific inflation rates calculated by the democratic price index, (ii) to examine new dimensions of inflation inequality in Turkey by income groups and household characteristics, (iii) to estimate the micro-level determinants of household inflation rates in Turkey. Results suggest that inflation rates are lower for the rich than for the poor, and the distribution of inflation has worsened the income inequality in Turkey. This analysis provides rich information for monetary policymakers. Households have different responses to price changes or monetary policy tools because of their unique characteristics and economic conditions. Thus, we need to know how inflation rates differ at the household level in order to understand how monetary policy and inflation affect the well-being of households.

Keywords: Consumption; Inflation; Inflation Inequality; Monetary Policy; Household Economics (search for similar items in EconPapers)
JEL-codes: D30 E21 E31 I31 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:buecrj:0528

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