Research Article


DOI :10.26650/ISTJECON2023-1263485   IUP :10.26650/ISTJECON2023-1263485    Full Text (PDF)

Decoding Inflation: Role of Institutional Quality in Türkiye Using Advanced Econometric Techniques

Yıldırım Beyazıt Çiçen

Persistent inflation remains a significant economic challenge in Türkiye. The causes of high inflation have been examined through various factors, including supply and demand, as well as monetary and fiscal policies. However, few studies have included institutional factors in their analyses. The objective of this study is to determine whether institutional quality affects inflation in Türkiye. A novel and robust econometric analysis method is employed in this study. Between 2005 and 2019, the inflation rate, the International Country Risk Guide’s (ICRG) Political Risk Rating index, which measures the quality of institutional structure, and the changes in currency exchange rate basket variables in Türkiye were examined using the Fourier KPSS stationarity test and the Fourier Shin cointegration test. The results of the analysis indicate that inflation rate is co-integrated with institutional quality. The deterioration of institutional quality in Türkiye between 2005 and 2019 has been associated with an increase in inflation. While the implicit inflation targeting period in the inflation targeting regime implemented in Türkiye after 2002 was relatively successful, the explicit inflation targeting period failed to reduce inflation. The primary reason for the inability to achieve the specified inflation targets during these periods is the deterioration in the quality of institutions. It is also important to note that central bank independence is not immune to political influence and is one of the most important factors affecting inflation targeting. 

JEL Classification : D02 , E31 , E58

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APA

Çiçen, Y.B. (2024). Decoding Inflation: Role of Institutional Quality in Türkiye Using Advanced Econometric Techniques. Istanbul Journal of Economics, 74(1), 1-35. https://doi.org/10.26650/ISTJECON2023-1263485


AMA

Çiçen Y B. Decoding Inflation: Role of Institutional Quality in Türkiye Using Advanced Econometric Techniques. Istanbul Journal of Economics. 2024;74(1):1-35. https://doi.org/10.26650/ISTJECON2023-1263485


ABNT

Çiçen, Y.B. Decoding Inflation: Role of Institutional Quality in Türkiye Using Advanced Econometric Techniques. Istanbul Journal of Economics, [Publisher Location], v. 74, n. 1, p. 1-35, 2024.


Chicago: Author-Date Style

Çiçen, Yıldırım Beyazıt,. 2024. “Decoding Inflation: Role of Institutional Quality in Türkiye Using Advanced Econometric Techniques.” Istanbul Journal of Economics 74, no. 1: 1-35. https://doi.org/10.26650/ISTJECON2023-1263485


Chicago: Humanities Style

Çiçen, Yıldırım Beyazıt,. Decoding Inflation: Role of Institutional Quality in Türkiye Using Advanced Econometric Techniques.” Istanbul Journal of Economics 74, no. 1 (Dec. 2024): 1-35. https://doi.org/10.26650/ISTJECON2023-1263485


Harvard: Australian Style

Çiçen, YB 2024, 'Decoding Inflation: Role of Institutional Quality in Türkiye Using Advanced Econometric Techniques', Istanbul Journal of Economics, vol. 74, no. 1, pp. 1-35, viewed 10 Dec. 2024, https://doi.org/10.26650/ISTJECON2023-1263485


Harvard: Author-Date Style

Çiçen, Y.B. (2024) ‘Decoding Inflation: Role of Institutional Quality in Türkiye Using Advanced Econometric Techniques’, Istanbul Journal of Economics, 74(1), pp. 1-35. https://doi.org/10.26650/ISTJECON2023-1263485 (10 Dec. 2024).


MLA

Çiçen, Yıldırım Beyazıt,. Decoding Inflation: Role of Institutional Quality in Türkiye Using Advanced Econometric Techniques.” Istanbul Journal of Economics, vol. 74, no. 1, 2024, pp. 1-35. [Database Container], https://doi.org/10.26650/ISTJECON2023-1263485


Vancouver

Çiçen YB. Decoding Inflation: Role of Institutional Quality in Türkiye Using Advanced Econometric Techniques. Istanbul Journal of Economics [Internet]. 10 Dec. 2024 [cited 10 Dec. 2024];74(1):1-35. Available from: https://doi.org/10.26650/ISTJECON2023-1263485 doi: 10.26650/ISTJECON2023-1263485


ISNAD

Çiçen, YıldırımBeyazıt. Decoding Inflation: Role of Institutional Quality in Türkiye Using Advanced Econometric Techniques”. Istanbul Journal of Economics 74/1 (Dec. 2024): 1-35. https://doi.org/10.26650/ISTJECON2023-1263485



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Submitted10.03.2023
Accepted20.05.2024
Published Online19.07.2024

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