Inflation Targeting, Developing Countries and Preliminiary Considerations for Turkey

Alparslan Akçoraoğlu
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Alparslan Akçoraoğlu: Gazi University

Ekonomik Yaklasim, 2002, vol. 13, issue 45, 33-53

Abstract: The major objective of this paper is to analyze the applicability inflation targeting framework in Turkey. Moreover, the paper considers whether the prerequities for an effective inflation targeting strategy are present in developing countries. After discussing the implications of inflation targeting framework for Turkey, this article concludes that it would not be feasible for Turkey to adopt such a framework for monetary policy. Turkey must eliminate the fiscal roots of the inflation process and solve its public debt problem before adopting explicit inflation targeting. İn addition, we examined the predictive content of various economic variables for inflation in order to determine the statistical readiness of Turkey to meet the requirements of inflation targeting. The empirical evidence presented in this paper suggest that the main factor behind the inflationary process is fiscal imbalances and that money supply shocks are not the driving forceof inflation in Turkey.

Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:eyd:eyjrnl:v:13:y:2002:i:45:p:33-53

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