Post Covid Era: Future of Economies and World Order
Regional Analysis of Inflation Convergence in Turkiye with a Nonlinear ApproachAhmet İncekara, Yeşim Erönal
Inflation affects a country's consumption level, imports, exports, and trade, while significantly impacting the entire region's social welfare. Therefore, the convergence of inflation levels in different areas is essential for the macroeconomic development of a country. This study aims to analyze the existence of inter-regional inflation convergence by using data from 26 regions of Turkey in NUTS Level 2. Along with the general inflation rates, the convergence of the inflation rates in goods and services groups such as food and nonalcoholic beverages, alcoholic beverages and tobacco, housing, water, electricity, gas, health, and transportation are among the CPI indicators according to the main expenditure groups released by TurkStat, to the general inflation rates were investigated. In the first stage of the study, spatial statistics methods of Moran I and LISA statistics were applied to the CPI and goods and services groups for the years 2005, 2010, 2015, 2019, and 2020, and the inflation heterogeneity of the NUTS Level 2 regions was visualized with the obtained data. In the next stage, the existence of inflation convergence between regions between 2003:01-2020:07 was empirically tested. In this respect, after examining the linearity structure of the inflation series according to areas with the Harvey, Leybourne, and Xiao (2008) test, ADF and LS tests were applied for the series that exhibit a linear form, while Hepsağ (2019) nonlinear unit root was applied for the nonlinear structured series. The findings obtained from the tests show that the inflation rates of 20 regions in NUTS Level 2 converge with the general inflation rates.