This paper investigates the relationship between relative price variability (RPV) and inflation using monthly micro price data for 128 goods in 13 Turkish regions/cities for the period 1994-2010. The unique feature of this data set is the inclusion of annual inflation rates ranging between 0%...

Recent empirical research on the New Keynesian Phillips Curve (NKPC) does not offer any supporting evidence for its benchmark version in which all firms are forward-looking. There is, however, empirical support for a modified, "hybrid", NPKC, in which only a proportion of the firms that use a...

The long-run purchasing power parity (PPP) hypothesis is re-examined for Turkey and strong evidence on long-run PPP is provided by using standard multivariate cointegration techniques. It is argued that the refutation of PPP by Telatar and Kazdagli does not necessarily imply the failure of...

The forecast combination puzzle refers to the finding that a simple average forecast combination outperforms more sophisticated weighting schemes and/or the best individual model. The paper derives optimal (worst) forecast combinations based on stochastic dominance (SD) analysis with...

The forecast combination puzzle refers to the finding that a simple average forecast combination outperforms more sophisticated weighting schemes and/or the best individual model. The paper derives optimal (worst) forecast combinations based on stochastic dominance (SD) analysis with...

This article contributes to the vast literature on the predictive power of term structure on future inflation by focusing on an emerging market case: Turkey. The most important result emerging in our article is the following: Monetary policy change is an important determinant of the relationship...

In this paper, we investigate the interrelationships among Turkish interest rates having different maturities by using a regime-switching vector error correction model. We find a relationship of long-run equilibrium among interest rates having various maturities. Furthermore, we conclude that...

We argue that nonhomothetic preferences with habit formation in nondurable and durable consumption can be a driving force behind sectoral comovement in production. We make this point by augmenting a two-sector New Keyesian model a la Barsky, House and Kimball (2007) with these two real features...

We provide probability forecasts of key Turkish macroeconomic variables such as inflation and output growth. The probability forecasts are derived from a core vector error correction model of the Turkish economy and its several variants. We use model and window averaging to address uncertainties...

This paper investigates the relationship between the level of inflation and regional price-level convergence utilizing micro-level price data from Turkey during two clearly distinguishable periods of high and low inflation. The results indicate that higher persistence and slower convergence of...