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

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...

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Bibliographic Details
Published inBusiness and economic research Vol. 7; no. 2; p. 202
Main Authors Sıklar, Ilyas, Kocaman, Merve, Kapkara, Sevcan
Format Journal Article
LanguageEnglish
Published 15.08.2017
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Summary: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.
ISSN:2162-4860
2162-4860
DOI:10.5296/ber.v7i2.11541