Exchange rate pass-through into domestic price indicators: A sectoral analysis of Turkish economy

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Tezin Türü: Yüksek Lisans

Tezin Yürütüldüğü Kurum: Orta Doğu Teknik Üniversitesi, İktisadi ve İdari Bilimler Fakültesi, İktisat Bölümü, Türkiye

Tezin Onay Tarihi: 2011

Öğrenci: EMİNE ÖZGÜ ÖZEN

Danışman: ELİF AKBOSTANCI ÖZKAZANÇ

Özet:

The question of exchange rate pass-through into domestic inflation is a widely analyzed issue due to its importance as regards to monetary policy, exchange rate policy and in general macroeconomic policy for open economies. Although most of the literature is focused on the exchange rate pass-through at the aggregate level, there are fewer studies that are done at the sectoral level for the Turkish economy. In this study by using a distribution chain of pricing model developed by McCarthy (2000), pass-through of exchange rates and import prices into domestic prices for selected sectors are examined for the Turkish economy. The emprical model estimates a Vector Auto Regression (VAR) to see pass-through dynamics through times and across the selected sectors. This study covers March 2002-December 2010 period; the period of floating exchange rates. Findings indicate that pass-through has fallen recently in Turkey. Moreover, results of the analysis show that external factors explain an important proportion of the variance of domestic prices for the sectors which have a larger import share.