Exchange rate pass-through to inflation: The case of Turkey

Abstract

The exchange rate volatility affects to domestic price level via production costs in countries where production level depends largely on import inputs. Turkey is also one of the countries whose production level depends largely on import inputs. Thereby intermediate good import accounts for about of 76 % total import. It is expected that the exchange rate pass-through to inflation is high in Turkey. In this context, in this study, the validity and stability of the pass through effect hypothesis was analyzed in Turkey for the period 1990:01-2019:01. According to the results of the study, the pass-through effect hypothesis is valid in Turkey. © Peter Lang AG 2020.