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...

This paper estimates NAIRU (Non-Accelerating Inflation Rate of Unemployment) for the Turkish economy as an unobserved stochastic variable by systems approach. Based on a Phillips curve equation combined with an Okun law for output gap and unemployment gap, the systems approach imposes stochastic...