Akbal, Gülserim Özcan

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Citation - WoS: 1
The Amplification of the New Keynesian Models and Robust Optimal Monetary Policy
(Amer inst Mathematical Sciences-aims, 2020) Ozcan, Gulserim
This paper analyzes whether and how model uncertainty affects the amplification mechanism of the New Keynesian models in a simple min-max framework where the central bank plays a zero-sum game versus a hypothetical, evil agent. A first finding on a benchmark model with staggered price setting is that a robust optimal commitment policy necessitates more aggressive policy under a demand shock. Further, bringing additional persistence into the model deteriorates the effectiveness of monetary policy. Hence, allowing for either habit formation or partial indexation of prices to lagged inflation rate requires a stronger response for the policy to a demand shock. Together with the specification doubts, in order to reassure the private sector and signal that it will stabilize the fluctuations in the output gap, the policymaker reacts more aggressively as persistence rises. Although inflation persistence does not change the impact of model uncertainty, habit formation in consumption eliminates even reverses the impact of uncertainty on the policy reaction to a supply shock. In all cases, policymaker attributes less importance to nominal interest rate inertia with concerns about model uncertainty.
Citation - WoS: 4
Citation - Scopus: 4
Dissecting Turkish Inflation: Theory, Fact, and Illusion
(Springer, 2022) Kantur, Zeynep; Ozcan, Gulserim
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.
Citation - WoS: 11
Citation - Scopus: 13
What pandemic inflation tells: Old habits die hard
(Elsevier Science Sa, 2021) Kantur, Zeynep; Ozcan, Gulserim
COVID-19 has led to changes in individuals' consumption habits, which will cause the calculation of inflation based on the average consumption basket to give distorted information. Using debit and credit card spending data of Turkey, we build CPI weights and compute an alternative pandemic consumption basket price index for Jan 2020-Feb 2021. Our findings show that the pandemic inflation is higher than the official inflation rate during the first lockdown, suggesting a behavioral change in consumption. However, in the reopening period, old habits come back. During the second lockdown, the difference between the pandemic and the official inflation rates is trivial in comparison with the first lockdown. (C) 2021 Elsevier B.V. All rights reserved.
Citation - WoS: 1
Citation - Scopus: 1
Optimal Robust Monetary and Fiscal Policy Under Uncertainty on the Lower Bound
(Elsevier, 2024) Ozcan, Gulserim; Traficante, Guido
This paper studies robust policy when the policymaker has Knightian uncertainty about the exact position of the effective lower bound (ELB). First, we characterize optimal discretionary policy when a benevolent policymaker controls the nominal interest rate and the level of government spending. Compared to the full information case, an uncertainty -averse policymaker overestimates the level of the ELB, thereby triggering a more aggressive reduction in the nominal interest rate prior to the liquidity trap. Furthermore, the anticipation of a larger increase in public spending improves the trade-off between inflation and the output gap, and dampens the perceived worst -case level of the ELB. As a result, a less conservative fiscal stabilization is desirable to address the uncertainty concerns of the policymaker by partially substituting for the nominal interest rate at the ELB. Moreover, an inflation -conservative policymaker mitigates the impact of uncertainty on equilibrium outcomes even better than a fiscally active policymaker.

Journal	Count
Business and Economics Research Journal	1
Central Bank Review	1
Economic Analysis and Policy	1
Economic Change and Restructuring	1
Economics Letters	1

Akbal, Gülserim Özcan

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