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Exchange Rate Pass-Through in Turkey

Author/Editor: Leigh, Daniel | Rossi, Marco
Authorized for Distribution: November 1, 2002
Electronic Access: Free Full Text (PDF file size is 538KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: In light of the strong correlation between exchange rate movements and domestic prices in Turkey, it is important to assess the impact of the exchange rate on domestic prices, in particular as Turkey moves to an inflation targeting regime. This paper uses a recursive vector autoregression model to investigate the impact of exchange rate movements on prices in Turkey. We find that (i) the impact of the exchange rate on prices is over after about a year, but is mostly felt in the first four months, (ii) the pass-through to wholesale prices is more pronounced compared to the pass-through to consumer prices, and (iii) the estimated pass-through is complete in a shorter time and is larger than that estimated for other key emerging market countries.
 
Series: Working Paper No. 02/204
Subject(s): Exchange rates | Turkey | Inflation
Author's keyword(s): Exchange rate pass-through | inflation | inflation targeting | distribution chain | VAR | Turkey
 
English  
    Published:   November 1, 2002        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA2042002   Pages:   18
    Price:   US$15.00
       
     
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