Exchange Rate Pass-Through to Domestic Prices: The Turkish Case (2002-2014)

?lyas ??klar (), Merve Kocaman () and Sevcan Kapkara ()
Authors registered in the RePEc Author Service: Ilyas Siklar

Business and Economic Research, 2017, vol. 7, issue 2, 202-211

Abstract: This study examines the degree of exchange rate pass through (ERPT) into producer prices and consumer prices in Turkey. To see the effect of ERPT, recursive vector autoregressive (VAR) model on monthly data from January 2002 to November 2014 is used. Model includes six variables which are oil prices that represent supply shock, industry production index representing demand shocks, reserve money representing monetary policy, nominal exchange rate and CPI-PPI indices. Obtained results show that although there is a pass through from exchange rate to consumer and producer prices, its degree is not as effective as prior to 2001. This means that policymakers have more power for pursuing independent monetary policy.

Keywords: Exchange rate; Pass through effect; Consumer prices; Producer prices (search for similar items in EconPapers)
JEL-codes: E31 E52 F31 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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