The impact of sectoral competition on inflation in Turkey


Thesis Type: Postgraduate

Institution Of The Thesis: Orta Doğu Teknik Üniversitesi, Faculty of Economic and Administrative Sciences, Department of Economics, Turkey

Approval Date: 2009

Student: SİNAN ÇÖRÜŞ

Co-Supervisor: NADİR ÖCAL, EBRU VOYVODA

Abstract:

This thesis explores the impact of sectoral competition on inflation in Turkey. To this end, panel data analyses investigating the determinants of deviation of sectoral price inflation from the consumer price inflation, and the resulting effect of the changes in the level of sectoral competition on this deviation measure are conducted in both static and dynamic frameworks. The empirical analyses covers the 1995-2001 period and 62 manufacturing sectors classified according to International Standard of Industrial Classification (ISIC) Rev. 2 at 4-digit level. The findings of the empirical analyses are particularly important for the assessment of the theoretical foundations and empirical basis of the recent proposals favoring enhancement of competition with disinflationary motives. The static analyses suggest that sectoral concentration is insignificant in explaining deviations of sectoral inflation from consumer inflation, while dynamic analyses suggest enhancing competition may lead to higher levels of sectoral inflation. The interpretation of the results indicates that enhancing competition may not be a viable tool for disinflationary purposes in Turkey.