The Analysis of Convergence of Inflation Rates of Goods and Services with General Inflation Rates in the Turkish Economy

Melike Ecem Sertbaş ()
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Melike Ecem Sertbaş: İstanbul Üniversitesi, Sosyal Bilimler Enstitüsü, Ekonometri Anabilim Dalı, İstanbul, Türkiye.

EKOIST Journal of Econometrics and Statistics, 2019, vol. 30, issue 0, 21-31

Abstract: The purpose of this study is to test whether the inflation rates of the 12 goods and services group classified by the Turkish Statistical Institute (Food and Soft Drinks, Alcoholic Beverages and Tobacco, Clothing and Footwear, Housing, Water, Electricity, Gas and Other Fuels, Furniture, Home Appliances and Home Care Services, Health, Transport, Communication, Entertainment and Culture, Education, Restaurants and Hotels and Various Goods and Services), converge with general inflation rates. In line with this, the Kruse (2011) unit root test and the Hepsağ (2019) unit root test, which considers structural breaks and nonlinearity were applied to the monthly inflation data covering the periods 2003: 02 2019: 03. As a result of the empirical analysis, while the convergence hypothesis was not valid for the Kruse (2011) test for any of the goods and services groups; only Furniture, Home Appliances and Home Care Services converged with the general inflation rates out of the 12 goods and services groups; it is concluded that there is no convergence in other goods and service groups according to the Hepsağ (2019) test. According to these results, it is concluded that the monetary policies applied are not reflected in the prices of goods and services in general and the policies implemented are not successful.

Keywords: Inflation Convergence; Monetary Policy; Unit Root Tests; Structural Break; Nonlinearity (search for similar items in EconPapers)
JEL-codes: C22 E31 E52 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:ist:ekoist:v:30:y:2019:i:0:p:21-31

DOI: 10.26650/ekoist.2018.30.0008

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