A cost-based empirical model of the aggregate price determination for the Turkish economy: A multivariate cointegration approach

This paper tries to examine the long run relationships between the aggregate consumer prices and some cost-based components for the Turkish economy. Based on a simple economic model of the macro-scaled price formation, multivariate cointegration techniques have been applied to test whether the real...

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Bibliographic Details
Published inPanoeconomicus Vol. 57; no. 2; pp. 173 - 188
Main Authors Zeren, Fatma, Korap, Levent
Format Journal Article
LanguageEnglish
Published Economists' Association of Vojvodina 01.01.2010
Subjects
aggregate consumer prices
Capital depreciation
cointegration
Consumer prices
Cost analysis
Economic models
Exchange rates
Inflation
Linear models
Turkey
Turkish economy
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Summary:This paper tries to examine the long run relationships between the aggregate consumer prices and some cost-based components for the Turkish economy. Based on a simple economic model of the macro-scaled price formation, multivariate cointegration techniques have been applied to test whether the real data support the a priori model construction. The results reveal that all of the factors, related to the price determination, have a positive impact on the consumer prices as expected. We find that the most significant component contributing to the price setting is the nominal exchange rate depreciation. We also cannot reject the linear homogeneity of the sum of all the price data as to the domestic inflation. The paper concludes that the Turkish consumer prices have in fact a strong cost-push component that contributes to the aggregate pricing. nema
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
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content type line 23
ISSN:1452-595X
2217-2386
DOI:10.2298/PAN1002173Z