Inflation Threshold Effect on Economic Growth in Turkey

Omer Esen (), Celil Aydin () and Recai Aydin ()
Additional contact information
Celil Aydin: Mu Alparslan University Mu Turkey, Postal: TR
Recai Aydin: Social Sciences University of Ankara Ankara Turkey, Postal: TR

Journal of Advanced Research in Law and Economics, 2016, vol. 7, issue 8, 1983-1993

Abstract: In this study the role of inflation threshold effect on economic growth has been investigated for Turkey in the 2002 Q1 2015 Q1 period At the first stage inflation threshold value has been detected After that inflation economic growth relation has been examined using threshold autoregressive TAR model Results indicate that there is a nonlinear relationship between inflation and growth rate the threshold for the influence of inflation on economic growth is 8 89 and an inflation rate above this threshold has a negative influence on economic growth while an inflation rate below this threshold has a positive influence on economic growth In this regard it is important to achieve sustainable growth which plays a crucial role in increasing the efficiency of implemented monetary policies and assuring stability Therefore political and economic decision makers should not ignore the concept of threshold within the scope of monetary policy while determining the target inflation rate in their efforts to deal with inflation

Date: 2016
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