An Econometric Analysis of the Determinants of Inflation in Turkey

Laura Papi and G. Lim

No 1997/170, IMF Working Papers from International Monetary Fund

Abstract: High and variable inflation has been a central feature of the Turkish economy since the 1970s. This paper seeks to shed some light on the determinants of inflation in Turkey by analyzing price determination within the framework of a multi-sector macroeconomic model during 1970–95. The main findings are that monetary variables (initially money, more recently the exchange rate) play a central role in the inflationary process, that public sector deficits contribute to inflationary pressures, and that inertial factors are quantitatively important. Policymakers’ commitment to active exchange rate depreciation on several occasions in the past 15 years has also contributed to the inflationary process.

Keywords: WP; price; price index; monetary policy; public finance; price determination; market disequilibrium terms; price equation; cost pressure; price inflation; foreign currency; mining sector price; exchange rate disequilibrium; price level; equilibrium exchange rate; price markup; Inflation; Real exchange rates; Exchange rates; Government debt management; Real wages (search for similar items in EconPapers)
Pages: 33
Date: 1997-12-01
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Citations: View citations in EconPapers (46)

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