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The impact of import on inflation: an ARDL analysis for the Turkish Economy

Year 2019, Volume: 19 Issue: 2, 415 - 426, 15.11.2019
https://doi.org/10.25294/auiibfd.595213

Abstract

Since it has
complicated and prominent interrelations with another macro and microeconomic
issues, determination of the causes of high level of inflation ranks almost
first among the major goals of economic policy. According to the Triangle Model
that was recently developed by Gordon (1997), inflation stems from three
dynamics called inertia, demand and supply. On the other hand, the Monetarists
and the Structuralists argue that inflation is caused by excessive money supply
and cost/push factors, respectively. In this context, the aim of this study is
to examine the impact of import volume on domestic inflation rate in the
Turkish economy for the period 1961-2017 by utilizing a proper cointegration
technique. Findings illustrated that inflation in Turkey basically stems from
monetary issues and it is import driven, as well. Thus, policy makers had
better take this bilateral structure into account while dealing with general
price level instabilities in the Turkish economy.

References

  • Ahmed, R. R., Ghauri, S. P., Vveinhardt, J., & Streimikiene, D. (2018). An Empirical Analysis of Export, Import, and Inflation: A Case of Pakistan. Romanian Journal of Economic Forecasting, 21(3).
  • Ayetuoma, O. C., & Tafirenyika, S. (2011). Is Namibia’s Inflation Import-driven? An Econometric Investigation (1990-2007). Journal of Development Alternatives and Area Studies, Vol. 30, No.1-2.
  • Bayraktutan, Y., & Arslan, İ. (2003). Türkiye’de döviz kuru, ithalat ve enflasyon ilişkisi: ekonometrik analiz (1980-2000). Afyon Kocatepe Üniversitesi, İİBF Dergisi, 5(2), 89-104.
  • Brown, R. L., Durbin, J., & Evans, J. M. (1975). Techniques for testing the constancy of regression relationships over time. Journal of the Royal Statistical Society: Series B (Methodological), 37(2), 149-163.
  • Chatelais, N., & Schmidt, K. (2017). The impact of import prices on inflation in the euro area. Rue de la Banque, (37).
  • Cheng, M. Y., & Tan, H. B. (2002). Inflation in Malaysia. International Journal of Social Economics, 29(5), 411-425.
  • Clausen, J. R., & Kandil, M. (2009). On Cyclicality in the Current and Financial Accounts: Evidence from Nine Industrial Countries. Eastern Economic Journal, 35(3), 338-366.
  • Corrigan, T. D. (2005). The Relationship Between Import Prices and Inflation in the United States. WCOB Faculty Publications. Paper 18.
  • Dexter, A. S., Levi, M. D., & Nault, B. R. (2005). International trade and the connection between excess demand and inflation. Review of International Economics, 13(4), 699-708.
  • Engle, R. F., & Granger, C. W. (1987). Co-integration and error correction: representation, estimation, and testing. Econometrica: journal of the Econometric Society, 251-276.
  • Ferrucci, G., Jiménez-Rodríguez, R., & Onorante, L. (2010). Food Price Pass-Through in the Euro Area-The Role of Asymmetries and Non-Linearities. ECB Working Paper Series, No.1168.
  • Gali, J., & Monacelli, T. (2005). Monetary policy and exchange rate volatility in a small open economy. The Review of Economic Studies, 72(3), 707-734.
  • Gaomab, M. II. (1998). Modelling inflation in Namibia. Research Bulletin (Bank of Botswana), 16(1), 53-75.
  • Gordon, R. J. (1997). The time-varying NAIRU and its implications for economic policy. Journal of economic Perspectives, 11(1), 11-32.
  • Johansen, S., & Juselius, K. (1990). Maximum likelihood estimation and inference on cointegration—with applications to the demand for money. Oxford Bulletin of Economics and statistics, 52(2), 169-210.
  • Kara, A., & Nelson, E. (2003). The exchange rate and inflation in the UK. Scottish Journal of Political Economy, 50(5), 585-608.
  • McCallum, B., & Nelson, E. (2000). Monetary policy for an open economy: an alternative framework with optimizing agents and sticky prices. Oxford Review of Economic Policy, 16(4), 74-91.
  • Muktadir-Al-Mukit, D., Shafiullah, A. Z. M., & Ahmed, M. R. (2013). Inflation led import or import led inflation: Evidence from Bangladesh. Asian Business Review, 2(2), 65-69.
  • Munepapa, M., & Sheefeni, J. P. (2017). The impact of import on inflation in Namibia. European Journal of Business, Economics and Accountancy, 5(2), 43-51.
  • Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of applied econometrics, 16(3), 289-326.
  • Rassekh, F., & Wilbratte, B. (1990). The Effect of Import Price Changes on Domestic Inflation: An Empirical Test of the Ratchet Effect: Note. Journal of Money, Credit and Banking, 22(2), 263-267.

İthalatın enflasyon üzerindeki etkisi: Türkiye Ekonomisi için bir ARDL analizi

Year 2019, Volume: 19 Issue: 2, 415 - 426, 15.11.2019
https://doi.org/10.25294/auiibfd.595213

Abstract

Diğer makro ve mikroekonomik konularla karmaşık ve önemli ilişkilere
sahip olduğundan, yüksek enflasyon düzeyinin sebeplerinin belirlenmesi ekonomi
politikasının ana hedefleri arasında neredeyse ilk sırada yer almaktadır. Son
dönemde Gordon (1997) tarafından geliştirilmiş olan Üçgen Modeline göre enflasyon
atalet, talep ve arz adı verilen üç dinamikten kaynaklanmaktadır. Diğer
taraftan Paracılar ve Yapısalcılar enflasyonun nedeninin sırasıyla aşırı para
arzı ve maliyet arttırıcı faktörler olduğunu ileri sürmektedir. Bu kapsamda çalışmanın
amacı, uygun bir eşbütünleşme analizi kullanarak, Türkiye ekonomisinde
1961-2017 döneminde ithalat hacminin yurtiçi enflasyon oranı üzerindeki
etkisini incelemektir. Bulgular, Türkiye'de enflasyonun temelde parasal
gelişmelerden kaynaklandığını ve aynı zamanda ithalat tarafından da
yönlendirildiğini göstermektedir. Bu nedenle, politika yapıcıların Türkiye’de
genel fiyat düzeyi istikrarsızlıkları ile ilgilenirken bu ikili yapıyı dikkate
almaları yararlı olacaktır.

References

  • Ahmed, R. R., Ghauri, S. P., Vveinhardt, J., & Streimikiene, D. (2018). An Empirical Analysis of Export, Import, and Inflation: A Case of Pakistan. Romanian Journal of Economic Forecasting, 21(3).
  • Ayetuoma, O. C., & Tafirenyika, S. (2011). Is Namibia’s Inflation Import-driven? An Econometric Investigation (1990-2007). Journal of Development Alternatives and Area Studies, Vol. 30, No.1-2.
  • Bayraktutan, Y., & Arslan, İ. (2003). Türkiye’de döviz kuru, ithalat ve enflasyon ilişkisi: ekonometrik analiz (1980-2000). Afyon Kocatepe Üniversitesi, İİBF Dergisi, 5(2), 89-104.
  • Brown, R. L., Durbin, J., & Evans, J. M. (1975). Techniques for testing the constancy of regression relationships over time. Journal of the Royal Statistical Society: Series B (Methodological), 37(2), 149-163.
  • Chatelais, N., & Schmidt, K. (2017). The impact of import prices on inflation in the euro area. Rue de la Banque, (37).
  • Cheng, M. Y., & Tan, H. B. (2002). Inflation in Malaysia. International Journal of Social Economics, 29(5), 411-425.
  • Clausen, J. R., & Kandil, M. (2009). On Cyclicality in the Current and Financial Accounts: Evidence from Nine Industrial Countries. Eastern Economic Journal, 35(3), 338-366.
  • Corrigan, T. D. (2005). The Relationship Between Import Prices and Inflation in the United States. WCOB Faculty Publications. Paper 18.
  • Dexter, A. S., Levi, M. D., & Nault, B. R. (2005). International trade and the connection between excess demand and inflation. Review of International Economics, 13(4), 699-708.
  • Engle, R. F., & Granger, C. W. (1987). Co-integration and error correction: representation, estimation, and testing. Econometrica: journal of the Econometric Society, 251-276.
  • Ferrucci, G., Jiménez-Rodríguez, R., & Onorante, L. (2010). Food Price Pass-Through in the Euro Area-The Role of Asymmetries and Non-Linearities. ECB Working Paper Series, No.1168.
  • Gali, J., & Monacelli, T. (2005). Monetary policy and exchange rate volatility in a small open economy. The Review of Economic Studies, 72(3), 707-734.
  • Gaomab, M. II. (1998). Modelling inflation in Namibia. Research Bulletin (Bank of Botswana), 16(1), 53-75.
  • Gordon, R. J. (1997). The time-varying NAIRU and its implications for economic policy. Journal of economic Perspectives, 11(1), 11-32.
  • Johansen, S., & Juselius, K. (1990). Maximum likelihood estimation and inference on cointegration—with applications to the demand for money. Oxford Bulletin of Economics and statistics, 52(2), 169-210.
  • Kara, A., & Nelson, E. (2003). The exchange rate and inflation in the UK. Scottish Journal of Political Economy, 50(5), 585-608.
  • McCallum, B., & Nelson, E. (2000). Monetary policy for an open economy: an alternative framework with optimizing agents and sticky prices. Oxford Review of Economic Policy, 16(4), 74-91.
  • Muktadir-Al-Mukit, D., Shafiullah, A. Z. M., & Ahmed, M. R. (2013). Inflation led import or import led inflation: Evidence from Bangladesh. Asian Business Review, 2(2), 65-69.
  • Munepapa, M., & Sheefeni, J. P. (2017). The impact of import on inflation in Namibia. European Journal of Business, Economics and Accountancy, 5(2), 43-51.
  • Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of applied econometrics, 16(3), 289-326.
  • Rassekh, F., & Wilbratte, B. (1990). The Effect of Import Price Changes on Domestic Inflation: An Empirical Test of the Ratchet Effect: Note. Journal of Money, Credit and Banking, 22(2), 263-267.
There are 21 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Articles
Authors

Can Tansel Tuğcu 0000-0001-9204-6361

Ayşe Meral Uzun 0000-0002-8787-8240

İlyas Özkök 0000-0002-3305-7199

Publication Date November 15, 2019
Submission Date March 26, 2019
Acceptance Date July 22, 2019
Published in Issue Year 2019 Volume: 19 Issue: 2

Cite

APA Tuğcu, C. T., Uzun, A. M., & Özkök, İ. (2019). The impact of import on inflation: an ARDL analysis for the Turkish Economy. Akdeniz İİBF Dergisi, 19(2), 415-426. https://doi.org/10.25294/auiibfd.595213
AMA Tuğcu CT, Uzun AM, Özkök İ. The impact of import on inflation: an ARDL analysis for the Turkish Economy. Akdeniz İİBF Dergisi. November 2019;19(2):415-426. doi:10.25294/auiibfd.595213
Chicago Tuğcu, Can Tansel, Ayşe Meral Uzun, and İlyas Özkök. “The Impact of Import on Inflation: An ARDL Analysis for the Turkish Economy”. Akdeniz İİBF Dergisi 19, no. 2 (November 2019): 415-26. https://doi.org/10.25294/auiibfd.595213.
EndNote Tuğcu CT, Uzun AM, Özkök İ (November 1, 2019) The impact of import on inflation: an ARDL analysis for the Turkish Economy. Akdeniz İİBF Dergisi 19 2 415–426.
IEEE C. T. Tuğcu, A. M. Uzun, and İ. Özkök, “The impact of import on inflation: an ARDL analysis for the Turkish Economy”, Akdeniz İİBF Dergisi, vol. 19, no. 2, pp. 415–426, 2019, doi: 10.25294/auiibfd.595213.
ISNAD Tuğcu, Can Tansel et al. “The Impact of Import on Inflation: An ARDL Analysis for the Turkish Economy”. Akdeniz İİBF Dergisi 19/2 (November 2019), 415-426. https://doi.org/10.25294/auiibfd.595213.
JAMA Tuğcu CT, Uzun AM, Özkök İ. The impact of import on inflation: an ARDL analysis for the Turkish Economy. Akdeniz İİBF Dergisi. 2019;19:415–426.
MLA Tuğcu, Can Tansel et al. “The Impact of Import on Inflation: An ARDL Analysis for the Turkish Economy”. Akdeniz İİBF Dergisi, vol. 19, no. 2, 2019, pp. 415-26, doi:10.25294/auiibfd.595213.
Vancouver Tuğcu CT, Uzun AM, Özkök İ. The impact of import on inflation: an ARDL analysis for the Turkish Economy. Akdeniz İİBF Dergisi. 2019;19(2):415-26.
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