Inflation across income groups: the case of Turkey

Download

12625835.pdf

Date

2020-10

Author

Çelik, Duygu

Metadata

Show full item record

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Item Usage Stats

451
views

523
downloads

This study, covering the period from 2004 to 2018, investigates the inflation differentials across income groups and the determinants of group-specific inflation in Turkey. We use the micro-data from the Household Budget Survey and consumer price data to calculate group-specific inflation rates. We find that inflation differentials across income groups vary throughout time in Turkey. Lower-income groups have higher inflation exposures in first half the period under investigation, especially between 2008-2010, whereas the higher income groups face higher inflation rates in the second half of the period, especially after 2014. Over the period under investigation, higher-income groups experience a higher inflation rate by 0.25% relative to lower-income groups in Turkey. The main contributors to the lowest income group inflation are “food and non-alcoholic beverages” and “housing.” Contrarily, “transport,” “cafes, restaurants and hotels,” and “miscellaneous goods and services” accelerate the highest income group inflation. After investigating inflation differentials, we focus on the determinants of group-specific inflation rates in Turkey. For this purpose, we use the VAR (Vector Autoregression) model. Our findings demonstrate that exchange rate changes have a higher impact on both the lowest and the highest income group inflation, whereas world energy price changes have an impact only on the highest income group inflation. However, the magnitude of the impact of exchange rate varies across these groups; the highest income group inflation is more sensitive to the exchange rate changes than the lowest income group inflation.

Subject Keywords

VAR model, Turkey, Developing countries, Inflation differentials, Income groups

URI

https://hdl.handle.net/11511/69235

Collections

Graduate School of Social Sciences, Thesis

Suggestions

OpenMETU
Core

Pro-rich inflation in Europe: Implications for the measurement of inequality Gürer, Eren; Weichenrieder, Alfons (2020-04-01) This paper studies the distributional consequences of a systematic variation in expenditure shares and prices. Using European Union Household Budget Surveys and Harmonized Index of Consumer Prices data, we construct household-specific price indices and reveal the existence of a pro-rich inflation in Europe. Over the period 2001-15, the consumption bundles of the poorest deciles in 25 European countries have, on average, become 11.2 percentage points more expensive than those of the richest deciles. We find ...
Effect of inflation differentials across income groups on inequality measures: the Turkish case Özüdoğru, Cem Taylan; Parmaksız, Ömer Kağan; Department of Economics (2020) The official inflation rate reflects the inflation of a typical urban household in an economy. However, inflation rates across income groups may diverge from each other since different income groups have different consumption patterns. The probability of observing inflation differentials across income groups increases when there are high income inequality and high food inflation in an economy. In addition, high inflation environment and frequent supply shocks may increase this probability more. Therefore, w...
Inflation Targeting in South Africa Friend or Foe of Development Cömert, Hasan (2011-06-01) In this study we focus on the South African experience with inflation targeting. We make two major claims in this paper. First, the South African experience with inflation targeting before the crisis was not successful, not in terms of advocates’ self-stated goals and certainly not in terms of key, ultimate real sector goals such as lower unemployment and higher economic growth. Second, as in a number of other countries, the SARB policy regime as well as its rhetoric about monetary policy significantly chan...
Exchange Rate Regimes as Thresholds: The Main Determinants of Capital Inflows in Emerging Market Economies Özmen, Erdal (2019-06-14) This study investigates whether the impacts of the main common push (global financial conditions, GFC) and country-specific pull (growth) factors on capital inflows are invariant to the prevailing exchange rate regimes (ERRs) in emerging market economies. Our results suggest that endogenously estimated ERR thresholds do matter especially for the impact of GFC. The impact of GFC is substantially high under more flexible ERRs for all capital inflow types except FDI. FDI inflows are basically determined by the...
Does Inflation Vary across Income Groups? Evidence from an Emerging Market:?? Akçelik, Fatih; Cömert, Hasan (2017-05-11) Official inflation figures represent the inflation of a typical (representative) household in an economy. However, each household has own consumption behavior and pattern, which mostly depends on its income level. Relative price variability and the weight divergence of consumer items across households are more pronounced in the developing countries due to structural problems and income inequality. Therefore, exposed inflation is significantly different across households in the developing countries. As the f...

Citation Formats

D. Çelik, “Inflation across income groups: the case of Turkey,” M.S. - Master of Science, Middle East Technical University, 2020.