Do financial conditions have a predictive power on inflation in Turkey?
This paper aims at examining the causal relationships between financial conditions and inflation in Turkey by employing quarterly data from 2005:Q1 to 2015:Q3. To this end, the paper, first, constructs a financial conditions index (FCI) in Turkey and observes that the FCI can considerably capture t...
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| Format: | Article |
| Language: | English |
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EconJournals
2016-04-01
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| Series: | International Journal of Economics and Financial Issues |
| Online Access: | https://www.econjournals.com/index.php/ijefi/article/view/1879 |
| _version_ | 1797919843309060096 |
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| author | Umit Bulut |
| author_facet | Umit Bulut |
| author_sort | Umit Bulut |
| collection | DOAJ |
| description |
This paper aims at examining the causal relationships between financial conditions and inflation in Turkey by employing quarterly data from 2005:Q1 to 2015:Q3. To this end, the paper, first, constructs a financial conditions index (FCI) in Turkey and observes that the FCI can considerably capture the developments in Turkey and in the world. Then, the paper follows unit root tests. Finally, the paper conducts the asymmetric causality test. The asymmetric causality test explores that the FCI and inflation have a predictive power on each other and thus presents valuable information to the Central Bank of the Republic of Turkey (CBRT). Eventually, upon its findings, the paper asserts that the FCI (i) should be updated periodically, (ii) should be extended with new financial variables, if necessary, and (iii) should be monitored carefully by the CBRT in order to achieve inflation targets.
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| first_indexed | 2024-04-10T13:51:52Z |
| format | Article |
| id | doaj.art-3a6657508d9d4792a693c2e9b383f60c |
| institution | Directory Open Access Journal |
| issn | 2146-4138 |
| language | English |
| last_indexed | 2024-04-10T13:51:52Z |
| publishDate | 2016-04-01 |
| publisher | EconJournals |
| record_format | Article |
| series | International Journal of Economics and Financial Issues |
| spelling | doaj.art-3a6657508d9d4792a693c2e9b383f60c2023-02-15T16:10:38ZengEconJournalsInternational Journal of Economics and Financial Issues2146-41382016-04-0162Do financial conditions have a predictive power on inflation in Turkey?Umit Bulut This paper aims at examining the causal relationships between financial conditions and inflation in Turkey by employing quarterly data from 2005:Q1 to 2015:Q3. To this end, the paper, first, constructs a financial conditions index (FCI) in Turkey and observes that the FCI can considerably capture the developments in Turkey and in the world. Then, the paper follows unit root tests. Finally, the paper conducts the asymmetric causality test. The asymmetric causality test explores that the FCI and inflation have a predictive power on each other and thus presents valuable information to the Central Bank of the Republic of Turkey (CBRT). Eventually, upon its findings, the paper asserts that the FCI (i) should be updated periodically, (ii) should be extended with new financial variables, if necessary, and (iii) should be monitored carefully by the CBRT in order to achieve inflation targets. https://www.econjournals.com/index.php/ijefi/article/view/1879 |
| spellingShingle | Umit Bulut Do financial conditions have a predictive power on inflation in Turkey? International Journal of Economics and Financial Issues |
| title | Do financial conditions have a predictive power on inflation in Turkey? |
| title_full | Do financial conditions have a predictive power on inflation in Turkey? |
| title_fullStr | Do financial conditions have a predictive power on inflation in Turkey? |
| title_full_unstemmed | Do financial conditions have a predictive power on inflation in Turkey? |
| title_short | Do financial conditions have a predictive power on inflation in Turkey? |
| title_sort | do financial conditions have a predictive power on inflation in turkey |
| url | https://www.econjournals.com/index.php/ijefi/article/view/1879 |
| work_keys_str_mv | AT umitbulut dofinancialconditionshaveapredictivepoweroninflationinturkey |