Exchange Rate Pass-Through to Domestic Prices: The Turkish Case (2002-2014)

Ilyas Sıklar, Merve Kocaman, Sevcan Kapkara

Abstract


This study examines the degree of exchange rate pass through (ERPT) into producer prices and consumer prices in Turkey. To see the effect of ERPT, recursive vector autoregressive (VAR) model on monthly data from January 2002 to November 2014 is used. Model includes six variables which are oil prices that represent supply shock, industry production index representing demand shocks, reserve money representing monetary policy, nominal exchange rate and CPI-PPI indices. Obtained results show that although there is a pass through from exchange rate to consumer and producer prices, its degree is not as effective as prior to 2001. This means that policymakers have more power for pursuing independent monetary policy.


Full Text:

PDF


DOI: https://doi.org/10.5296/ber.v7i2.11541

Refbacks

  • There are currently no refbacks.


Business and Economic Research  ISSN 2162-4860

Copyright © Macrothink Institute

To make sure that you can receive messages from us, please add the 'macrothink.org' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.