The Evolution of Exchange Rate Pass-Through in Turkey: Does Inflation Targeting Matter?

Authors : Dincer Dedeoglua, Huseyin Kayab

Pages : 26-33

View : 14 | Download : 7

Publication Date : 2014-06-01

Article Type : Research

Abstract :In this paper, we aim to investigate the behaviour of exchange rate pass-through in Turkey. We examine how the pass-through evolves over time by employing a rolling VAR. We find that the exchange rate pass-through has declined sharply after the adoption of inflation targeting regime. Additionally, we find that the exchange rate has a larger impact on the producer prices than on the consumer prices, and the gap between two impacts has significantly increased after the implementation of inflation targeting
Keywords : Exchange Rate, Pass-Through, Rolling Var, Inflation Targeting