## Would "Cold Turkey" Work in Turkey?

_IMF Working Papers, March 1, 2003_

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## Bibliographic details
- Authors: Gaston Gelos, Alessandro Prati, Oya Celasun
- Published: March 1, 2003
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451846867.001

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### Overview
- Title: Would "Cold Turkey" Work in Turkey?
- Authors: Gaston Gelos, Alessandro Prati, Oya Celasun
- Date: March 1, 2003
- Series: Working Paper No. 2003/049
- Issue: 049
- Volume: 2003
- Pages: 20
- DOI: https://doi.org/10.5089/9781451846867.001
- ISBN: 9781451846867
- ISSN: 1018-5941
- Stock No: WPIEA0492003

### Main findings
- Persistently high inflation rates have led to the belief that inflation in Turkey has become "inertial," posing an obstacle to disinflation.
- The authors assess the empirical validity of the "inertial inflation" argument and find:
  - The current degree of inflation persistence in Turkey is lower than in Brazil and Uruguay prior to their successful stabilization programs.
  - Expectations of future inflation are more important than past inflation in shaping the inflation process, providing little evidence of "backward-looking" behavior.
  - Using survey data, inflation expectations depend largely on the evolution of fiscal variables.

### Subject areas and keywords
- Subject: Disinflation, Fiscal policy, Fiscal stance, Government debt management, Inflation, Inflation persistence, Prices, Public financial management (PFM)
- Keywords: cost, CPI index, Disinflation, disinflation attempt, disinflation strategy, Fiscal stance, Government debt management, inertia, Inflation, inflation expectation, inflation persistence, Inflation persistence, price, price rigidities, stabilization, Turkey, variable, WP

### Implications highlighted by the paper
- Degree of inflation persistence in Turkey does not appear higher than historical precedents in Brazil and Uruguay before their stabilization successes.
- Forward-looking inflation expectations matter more than backward-looking inertia, implying that policies affecting expectations and fiscal fundamentals can be central to disinflation efforts.
- Fiscal variables play a major role in shaping inflation expectations as evidenced by survey data.

*IMF Working Paper by Gaston Gelos, Alessandro Prati, and Oya Celasun (March 1, 2003), Working Paper No. 2003/049, DOI: https://doi.org/10.5089/9781451846867.001*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/would-cold-turkey-work-in-turkey-16292_