Price Rigidity in Turkey: Evidence from Micro Data

Ozmen, Mustafa; Sevinc, Orhun

doi:10.1080/1540496x.2015.1047304

Cited by 13 publications

(8 citation statements)

References 44 publications

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“…The adjustment cost parameter for prices of domestic intermediate goods,   , is set at 745; this value implies a Calvo-type probability of not adjusting prices of approximately 071 percent per period, or equivalently an average period of price fixity of about 35 quarters. The latter figure is significantly higher than the numbers reported for Mexico and Turkey by Klenow and Malin (2011) and Özmen and Sevinç (2011) for instance, but it is consistent with the estimate of Carvalho et al (2014, Table2) for Brazil. The rate of depreciation of private capital, , is set equal to 002, a fairly standard value, which implies an annualized depreciation rate of 82 percent.…”

Section: The Distribution Parameter Between Domestic and Imported Intsupporting

confidence: 90%

External shocks, financial volatility and reserve requirements in an open economy

Agénor

Alper

Silva

2018

Journal of International Money and Finance

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The performance of a simple, countercyclical reserve requirement rule is studied in a dynamic stochastic model of a small open economy with financial frictions, imperfect capital mobility, a managed float regime, and sterilized foreign exchange market intervention. Bank funding sources, domestic and foreign, are imperfect substitutes. The model is calibrated and used to study the effects of a temporary drop in the world risk-free interest rate. Consistent with stylized facts, the shock triggers an expansion in domestic credit and activity, asset price pressures, and a real appreciation. An optimal, credit-based reserve requirement rule, based on minimizing a composite loss function, helps to mitigate both macroeconomic and financial volatility-with the latter defined both in terms of a narrow measure based on the credit-to-output ratio, the ratio of capital flows to output, and interest rate spreads, and a broader measure that includes real asset prices as well. Greater reliance on sterilization implies a less aggressive optimal reserve requirements rule, implying that the two instruments are partial substitutes.

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Section: The Distribution Parameter Between Domestic and Imported Intsupporting

confidence: 90%

External shocks, financial volatility and reserve requirements in an open economy

Agénor

Alper

Silva

2018

Journal of International Money and Finance

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“…(Gouvea, 2007;Coricelli and Horvath, 2008;Creamer and Rankin, 2008;Lavín and Tejada, 2008;Ysusi, 2010;Benkovskis and Fadejeva, 2011;Reiff and Várhegyi, 2013;Edwards and Rankin, 2015;Francisca, 2016) are higher than these results. On the other hand, the results of the specific workings on price durations in Turkey (Özmen andSevinç, 2011 andKüçükefe, 2016) are consistent with these results.…”

Section: A D Resultssupporting

confidence: 80%

The Determinants of Price Frequency in Turkey

Yılmaz¹,

Süslü

2018

SSRN Journal

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The effect of monetary and fiscal policy on the output depends on the frequency of price changes.When the prices change infrequently or prices change slowly, monetary and fiscal policy have a real effects on the output. Developed countries generally have a rigid prices but developing countries have a relatively flexible prices. This difference is originated from the reality that the developing countries have higher average inflation than the developed countries. Economic literature focuses on the micro reasons of the frequency of price changes, on the other hand, the inflation is seen the main factor which affects the frequency of price changes in the macro perspective. This study holds down the assumption that the frequency of price changes is a function of the inflation rate in the macro perspective. In addition to this, it is also focused on the direct relationships between the frequency of price changes and the macro variables which affect the inflation rate. It is revealed the effect of macro factors on the frequency of price changes in this work. It is concluded that the determinants of the frequency of price changes in the macro perspective in Turkey are the expected inflation and the exchange rate rather than output gap. It can be said that firms' price frequency behavior directly depends on cost push factors in Turkey.

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“…11 This conclusion is consistent with the conclusion obtained by Özmen and Sevinç (2011) who found stickiness in the prices of consumption goods in Turkey. The abovementioned results obtained from Wavelet-based measures imply at the end for small distinctions between Divisia and simple sum monetary aggregates for their corresponding comovements with income and prices.…”

supporting

confidence: 83%

Divisia and Simple Sum Monetary Aggregates: Any Empirical Relevance for Turkey?

Polat

2018

Journal of Central Banking Theory and Practice

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In consideration of channels through which monetary policy affects economic activity, the monetary aggregates have been mostly ignored by the monetary authorities instead of which shortrun interest rates have been given a priori role. These monetary aggregates are largely argued to fail in measuring the effectiveness of different monetary policy regimes in forecasting the macroeconomic fundamentals. Grounded on the "Barnett critique", the formation of traditional simple-sum monetary aggregates assuming for perfect substitution among the components of the money supply is blamed for such a failure of money in explaining the real activity. Given increasing varieties of financial assets which have completely different "moneyness", it is important to provide an alternative measure of the money supply. Hereby, the Divisia monetary aggregates which give different weights to different assets have arisen as an alternative approach. In this study, a Divisia index is constructed to test its predictive power on quantities and prices compared to its simple sum counterpart. Accordingly, a Divisia index is built-up for Turkish economy for the period 2006-2016 to see whether the utilization of the Divisia monetary aggregates in the conduct of monetary policy makes any difference compared to that of traditional simple sum money supply. Under different specifications, though the relative power of the Divisia aggregates in predicting quantity and price variables is found, still, it can be argued that theoretically well-rounded formation of the Divisia index is not that much empirically justified for the case of Turkey.

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Price Rigidity in Turkey: Evidence from Micro Data

Cited by 13 publications

References 44 publications

External shocks, financial volatility and reserve requirements in an open economy

External shocks, financial volatility and reserve requirements in an open economy

The Determinants of Price Frequency in Turkey

Divisia and Simple Sum Monetary Aggregates: Any Empirical Relevance for Turkey?

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