The Relationship between Exchange Rate and Inflation: An Empirical Study of Turkey

Abderezak Ali Abdurehman; Samet Hacilar

Article Details

The Relationship between Exchange Rate and Inflation: An Empirical Study of Turkey

Authors:

Abderezak Ali Abdurehman | Samet Hacilar

Publisher:

İlhan ÖZTÜRK

Journal:

International Journal of Economics and Financial Issues 2016 Vol.6 Issue 4, pp.1454-1459

Document Type:

Article

Publication Date:

8/2016

Document Language:

Turkish

Document ID (Org No.):

2000812487

Frequency:

Bimonthly

eISSN:

2146-4138

Abstract:

 

This paper investigates the relationship between inflation and exchange rate in Turkey. Unlike many empirical studies which make use of the US and Turkey inflation data to test the relationship between inflation and exchange rate in Turkey, this paper employed inflation data of Turkey and the United Kingdom. An OLS regression and a simple GARCH model were used to understand the relationship between inflation and exchange rate. The results obtained from OLS regression indicate Purchasing Power Parity (PPP) does not exist in Turkey. However, the existence of ARCH and GARCH in the relationship indicates that the deviations from PPP are not random and follow a certain pattern. Therefore, we conclude that the deviation of PPP might be attributed to certain factors such as transaction cost, government restriction, product specialization or other related factors.

Article Details

The Relationship between Exchange Rate and Inflation: An Empirical Study of Turkey

Authors: Abderezak Ali Abdurehman | Samet Hacilar

Publisher: İlhan ÖZTÜRK

Journal: International Journal of Economics and Financial Issues 2016 Vol.6 Issue 4, pp.1454-1459

Document Type: Article

Publication Date: 8/2016

Document Language: Turkish

Document ID (Org No.): 2000812487

Frequency: Bimonthly

eISSN: 2146-4138

Issues

Authors:

Abderezak Ali Abdurehman | Samet Hacilar

Publisher:

İlhan ÖZTÜRK

Journal:

International Journal of Economics and Financial Issues 2016 Vol.6 Issue 4, pp.1454-1459

Document Type:

Article

Publication Date:

8/2016

Document Language:

Turkish

Document ID (Org No.):

2000812487

Frequency:

Bimonthly

eISSN:

2146-4138