This paper investigates the inflation dynamics in Turkey between 1988 and 2000. Using model-free techniques, we first observe that there is strong inertia in Turkish inflation. Next, we look at the correlations between Consumer Price Index (CPI) inflation and the leads and lags of the various...

The poor performance of sticky-price models with rational expectations in explaining the inflationary inertia in the US economy constitutes the basis for sticky-price models of nearrational expectations in the recent literature. However, previous studies on inflationary inertia in Turkey not...

We analyze the implications of the time inconsistency problem for the Turkish monetary policy in the last two decades. After deriving the restrictions that the Barro and Gordon model imposes on a time series model for inflation and output, we show that the time inconsistency problem can explain...