SEARCHING FOR THE OPTIMAL LEVEL: INFLATION AND PRICE VARIABILITY IN TURKEY

Hatice Karahan () and M.â Ege Yazgan
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Hatice Karahan: Istanbul Medipol University, Istanbul, Turkey
M.â Ege Yazgan: ��Istanbul Bilgi University, Istanbul, Turkey

The Singapore Economic Review (SER), 2023, vol. 68, issue 01, 197-215

Abstract: This paper explores the relationship between inflation and relative price variability (RPV) in Turkey for the period 2004–2017 to shed further light on the issue with relatively recent data. For this purpose, we use monthly price data for 12 main item groups and 414 specific items thereof. Analyses show that RPV for the period of interest exhibits large fluctuations, being particularly salient in the categories of communications and food. Regarding the underlying functional form, semi-parametric estimation results indicate a U-shaped relationship between inflation and RPV, where the latter reaches its minimum at an inflation level close to 8%.

Keywords: Relative price variability; inflation; semi-parametric regression (search for similar items in EconPapers)
JEL-codes: C32 O47 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:wsi:serxxx:v:68:y:2023:i:01:n:s0217590819500231

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DOI: 10.1142/S0217590819500231

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