Explaining and Forecasting Inflation in Turkey

Domaç ; , Ilker

World Bank, Washington, D.C.

关键词: ADMINISTERED PRICES;    AGGREGATE DEMAND;    CENTRAL BANK;    CENTRAL BANK INDEPENDENCE;    CENTRAL BANKS;   

DOI  :  10.1596/1813-9450-3287
RP-ID  :  WPS3287

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The growing adoption of an inflationtargeting framework in emerging market economies hasincreased the importance of understanding inflation dynamicsand forecasting its future path in these countries. Theauthor considers the case of Turkey and investigates theperformance of models that have some theoreticalfoundations. To this end, his study focuses on mark-upmodels, monetary models, and the Phillips curve. Thefindings suggest that the mark-up models have the bestin-sample performance followed by money gap models and thePhillips curve. The empirical results from out-of-sampleforecasting performance for the period covering the neweconomic program (May 2001-December 2002), however, showthat the Phillips curve and the money gap models performbetter than mark-up models. These findings, in turn, implythat (1) Phillips curves augmented with the exchange rateand money models might provide complementary views in theTurkish context; and (2) the relative importance of outputgap and monetary disequilibrium in the inflation process hasincreased under the floating exchange rate regime. Theresults underscore the importance of relying on multiplemodels of inflation in the conduct of Turkish monetary policy.