Causes of Inflation in Turkey: A Literature Survey with Special Reference to Theories of Inflation

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: Turkey has experienced high and persistent inflation for more than twenty years. Terms of use: Documents inThis chapter attempts firstly to survey the extremely broad literature on theories of inflation, in order to be able to classify, understand and discuss the dynamics of inflation more carefully. In this chapter, it is mainly argued that inflation may be interpreted as a net result of sophisticated and continuous interactions of demand-side (or monetary) shocks, supply-side (or real) shocks, price-adjustment (or inertial) factors and political processes (or institutional factors). The second aim of the chapter is to compare the existing empirical studies on Turkish inflation, by considering their sample period, data frequency, empirical methods, modeled macroeconomic variables and main results. Most of the studies reviewed here seem to have focused primarily on demand-side determinants (e.g., monetary growth and budget deficits), and partially on some supply-side factors (e.g., nominal exchange rates and oil prices). On the other hand, the components, degree and effects of inflation inertia need to be investigated in more detail. In the future, the modeling attempts of the inflationary dynamics in Turkey would profit from the so-called "new political macroeconomics" because the role of the political process and institutions is not a weak explanatory factor of Turkish inflation.

Can an Islamic model of housing finance cooperative elevate the economic status of the underprivileged?

“…Its causes are highly disputed in the literature, stemming from the complex and dynamic interactions of four groups of factors: monetary (demand-side) shocks, real (supply-side) shocks, inertial (price adjustment) factors, and institutional (political process) factors (see Kibritcioglu, 2001). …”

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“…A c c e p t e d M a n u s c r i p t 20 interactions of four groups of factors: the monetary (demand-side) shocks, the real (supply-side) shocks, the inertial (price adjustment) factors, and the institutional (political process) factors (see Kibritcioglu, 2002). Inflationary expectations affect the exogenous interest rate (and the discount factor see Equation (2) This changes the appreciation (µ) as well as the risk of it (σ).…”

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“…Both inflation rates display an upwards trending behavior since the early 1970s with occasional outbursts, e.g., in the late 1970s and in mid-1990s. For a comprehensive review of inflation experience in Turkey we direct an interested reader to Kibritçioǧlu (2002).…”