Author/Authors :
GÜNEŞ, Şahabettin Abant İzzet Baysal Üniversitesi - Iktisadi ve Idari Bilimler Fakültesi (İİBF) - İktisat Bölümü, Turkey
Title Of Article :
AN ANALYSIS ON THE EXCHANGE RATE REGIME IN TURKEY AND ITS EFFECT ON INFLATION
Abstract :
In this study the relationship between price levels in Turkey and enxchange rates of US Dollar and Euro has been investigated. Cointegration analysis has been used in order to see the presence of long-run relationship between the variables. To see the direction of the relationship and the short-run dynamics between the selected variables, a Vector Error Correction Model (VECM) analysis has been utilized. The results show that there is a long-run equilibrium relationship between price levels in Turkey and the two exchange rates, (USD/TRY) and (EUR/TRY). The VECM estimates reveal that long run causality runs from the Exchange rates to inflation. As a result, the higher the exchange rates, the higher the inflation in Turkey.
NaturalLanguageKeyword :
Exchange rates , Inflation , Cointegration
JournalTitle :
The International Journal Of Economic and Social Research
