Dissecting Turkish inflation: theory, fact, and illusion

Zeynep Kantur () and Gülserim Özcan

Economic Change and Restructuring, 2022, vol. 55, issue 3, No 10, 1543-1553

Abstract: Abstract The policy debate in Turkey over the impact of interest rate on inflation concerns the question of what policymakers should do when faced with volatile and high inflation. Motivated by this discussion, we provide an empirical analysis by connecting the cost channel to the Phillips relation. Our findings prove the existence of the cost channel. However, other determinants of inflation —labor share of income, prices of imported inputs, and consumption goods —dominate the cost channel in Turkey.

Keywords: Inflation dynamics; Cost channel; Monetary transmission; Open economy New Keynesian Phillips curve; Generalized method of moments (search for similar items in EconPapers)
JEL-codes: C22 E31 E58 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10644-021-09357-1

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