Dissecting Turkish inflation: theory, fact, and illusion

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Date

2022

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Springer

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Economics
(1997)
Founded in 1997, the Department of Economics is among the founding departments of our University. The Department offers two extensive undergraduate programs, either in English or in Turkish. Our undergraduate programs are catered to developing our students’ skills of analytical thinking, and to practical education. In this regard, the Social Sciences Research and Training Laboratory, founded under the guidance of our department, offers hands-on training to our own students, students and academicians from other universities, and public institutions. Our Department also offers a Graduate Degree Program in Applied Economy and a Doctorate Degree Program in Political Economy for graduates of undergraduate and graduate degree programs.

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Abstract

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.

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Özcan, Gülserim/0000-0002-8207-8930; Kantur, Zeynep/0000-0002-5756-6457
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Özcan, Gülserim ORCID logo
Kantur, Zeynep ORCID logo

Keywords

Inflation dynamics, Cost channel, Monetary transmission, Open economy New Keynesian Phillips curve, Generalized method of moments

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2

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Q2

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Q2

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Volume

55

Issue

3

Start Page

1543

End Page

1553

URI

https://doi.org/10.1007/s10644-021-09357-1
 https://hdl.handle.net/20.500.14411/1736

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