Inflation Dynamics in Turkey: In Pursuit of a Domestic Cost Measure

Selen Başer Andıç, Hande Kucuk () and Fethi Ogunc ()

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: We provide Bayesian estimates of an empirical model of consumer price inflation for Turkey based on the hybrid New Keynesian Phillips Curve. We decompose real marginal costs into domestic and foreign components and focus particularly on identifying the effect of the domestic component. We find that the baseline model which uses output gap as a measure of domestic real marginal costs does a better job in explaining consumer price inflation compared to alternative models which incorporate real unit labor costs. On the other hand, estimations for services inflation point to the importance of real unit labor costs for this sector.

Keywords: Inflation; Real marginal costs; Phillips Curve; Turkey (search for similar items in EconPapers)
JEL-codes: E12 E31 E37 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-ara, nep-cwa and nep-mac
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Citations: View citations in EconPapers (1)

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https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN ... g+Paperss/2014/14-20 (application/pdf)

Related works:
Journal Article: Inflation Dynamics in Turkey: In Pursuit of a Domestic Cost Measure (2015)
Working Paper: Inflation Dynamics in Turkey: In Pursuit of a Domestic Cost Measure (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:1420

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