The Analysis of Inflation--the Case of Turkey (1948-1988)
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Öz/Özet/İçindekiler TABLE OF CONTENTS Acknowledgements Abstract List of Tables List of Figures List of Abbreviations Chapter 1 Introduction 1 Chapter 2 Tıırkish Economic History: 1948-1988 7 2.1 Economic Policies: 1948-1958 7 2.1.1 Introduction 7 2.1.2 OveralI Adjustment in the 1950s 8 2.1.3 Fiscal Polİcy 11 2.1.4 Monetary Policies 13 2.1.5 1958 Devaluation and The Response of the Turkish Economy to the Stabilization Programme 14 2.2 Economic Planning Period: 1960-1970 17 2.2.1 Introduction 17 2.2.2 Public Finance 18 2.2.3 Financial Market, Interest Rates Credit and Money 19 2.2.4 Trade, External Payments and Debt 24 2.3 Economic Policies: 1970-1979 25 2.3.1 Introduction 25 2.3.2 OveralI Adjustment in the 1970s 26 2.33 Debt Crisis 27 2.3.4 The Public Sector 29 2.3.5 Money and Inflation 29 2.3.6 Stabilization Policies and 1977-78 Devaluations 30 2.4 Structural Reform and Stabilization: 1980-1988 31 2.4.1 Introduction 31 2.4.2 The 1980 Structural Reform 32 2.4.3 Stabilization Policies 40 2.4.4 Conclusion 46 Chapter 3 Theoretical Economic Background for Inflation 49 3.1 Introduction 49 3.2 Püre Monetary Theory of Infiation 52 3.3 Seigniorage, Inflation, Deficit and Its Financing 54 3.3.1 Money Financing 55 3.3.2 Bond and Money Financing of Deficit 60 3.4 Infiation in an International Context 63 3.4.1 Purchasing Powef Parity Theory (PPP) 63 3.4.2 Interest Rate Linkages and PPP 65 3.5 A Model for the Labour Market 66 3.6 Theoretical Framework for the Turkish Economy 68 Chapter 4 Econometric Fraraework 73 4.1 Introduction 73 4.2 Data Construction 73 4.3 Econometric Modelling of Aggregate Time Series Data 75 43.1 Cointegration 75 4.3.2 Seasonal Adjustment 78 43.3 Autocorrelation and Common Factor Restrictions 79 4.3.4 Level vs Differencİng 81 4.3.5 Simple Dynamic Model: Error Correction Model(ECM) 83 4.3.6 Exogeneİty 84 4.3.7 The VAR and SEM Specification 87 4.4 Conclusions 91 Chapter 5 Modelling The Demand for Money in Turkey 93 5.1 Introduction 93 5.2 Econometric Modelling Issues 94 5.3 The Türkish Demand for Money Function 95 5.3.1 Previous Works on Turkish Demand for Money 95 5.3.2 Data Analysis 96 5.3.2.1 Data Construction 96 5.3.2.2 Time Series Properties 100 5.3.2.3 Cointegration Regressions 102 5.3.2.4 Multİcoİntegration Analysis 103 5.3.2.5 Testing Linear Restrictions on a and 6 107 5.4 Modelling 111 5.4.1 Long-run Demand For Money 111 5.4.2 Short-run Demand For Money 114 5.5 Testing for Super Exogeneity (Testing the Lucas' Critique) 118 5.6 Structural Econometric Modelling 123 5.7 Conclusions 124 Appendix 5 126 Chapter 6 The Government's Revenue from Money Creation:Public Deficit and its Financing 133 6.1 Introduction 133 6.2 Infiation, Real Balances and Seigniorage 134 6.2.1 Definitions and Previous Works 134 6.2.2 Turkish Case 135 6.3 Public Sector Deficit 136 6.3.1 Definitions 137 6.3.2 Turkish Case 138 6.4 Empirical Analysis 142 6.4.1 Evidence from The Previous Works 142 6.4.2 Time Series Properties of Data 142 6.43 Cointegration Analysis 144 6.4.4 Modelling 149 6.5 Conclusions 156 Appendix 6 158 Chapter 7 Foreign Effects on Prices in the Türkish Economy 163 7.1 Introductİon 163 7.2 Background 163 7.3 The Empirical Evidence on the PPP and the UIP Relationships 165 7.3.1 The Purchasing Power Parity Hypothesis 165 7.3.2 The Uncovered Interest Parity 166 7.4 The Empirical Evidence on the Turkish Case 167 7.4.1 The Time Series Properties of the Data 167 7.4.2 Some Empirical Problems 172 7.4.2.1 Does the Direction of Causality Alter from Fixed to FloatingRegime? 172 7.4.2.2 Do Regime Shifts pose Problems? 172 7.4.2.3 Absence of Causality from Small Country to the World Economy 173 7.4.2.4 Importance of Increasing Trend in the Foreign Sector 173 7.5 Multivariate System Cointegration Analysis 174 7.5.1 Testing the Linear Restrictions 177 7.5.1.1 Testing for Weak Exogeneity 177 7.5.1.2 Testing the Linear Restriction on both a and G 179 7.6 Concluding Remarks 181 Appendk 7 182 Chapter 8 Models of Wage and Price Determination in Turkey 189 8.1 Introductİon 189 8.2 Background 190 8.3 Data 194 8.4 Time Series Properties of the Data 196 8.5 Multicointegration Analysis 197 8.5.1 Tests of Linear Restriction on B 199 8.6 Concluding Remarks 202 Appendk 8 204 Chapter 9 Conclusion: An Integrated Analysis of Hirkish Inflation 209 Bibliography 218 Chapter 3.1 Government Finance, Base Money and Equilibrİum Inflation 56 2 The Low Inflation Equilibrium 56 3 The High and Low Inflation Equilibria 56 4 Unstable Low Inflation Equilibrium and Stable High Inflation Equİlibrium 62 5 Bond and Money Financing of deficts 62 6 The Basİc Relationship are gjven in the Theoretical Framework 72 Chapter 5.1 The Log of the Ouarterly Nominal GNP 97 2 The Log of the 4 th order Moving Average Quartely Nominal GNP 97 3 The Log of the Annual Nominal GNP 97 4 The Log of the 4 th order Moving Average Annual Nominal GNP 97 5 The Log of the Quarterly Real GNP 97 6 The Log of the 4 th order Moving Averaged Ouartely Real GNP 97 7 The Log of the Annual Real GNP 98 8 The Log of the 4 th order Moving Averaged Annual Real GNP ... 98 8a The Annual Growth Rate of Nominal GNP (Original data) 98 8b the Annual Growth Rate of Real GNP(Original data) 98 9 The Log of the Nominal Mİ 101 10 The Log of the GNP Deflator 101 11 The Log of the Real Mİ 101 12 The Log of the Real Annual Mİ 101 13 The Velocity 101 14 The Central Bank Deposit Rates 101 15 Inflation (Quarterly) 102 16 Annual Inflation 102 17 The Cointegration Relations and Driving Forces 105 18 The Break-Point Chow Statistics 119 19 One Step Residuals and Corresponding equation Standard Errors 119 20 The Break-Point Chow Statistics 120 21 One Step Residuals and Corresponding equatİon Standard Errors 120 22 The Break-Point Chow Statistics 121 23 One Step Residuals and Corresponding equatİon Standard Errors 121 Chapter 6.1 Inflation tax 1950-87 136 2 Seigniorage 1950-87 136 3 The Revenue from Inflation 1950-87 137 4 The Central Government deficit 1950-87 140 5 The Structural Balance 140 6 The Log of Central Govenment Revenues 143 7 The Log of Central Govenment Expendİtures 143 8 The Growth Rate of Central Government Revenue 143 9 The Growth Rate of Central Government Expenditures 143 10 The Central Government Deficit över Base Money 143 11 The Central Government Deficit över Base Money less the GrovvthrateofRealGNP 143 12 The Log of the Base Money 143 13 Growth Rate of the Base Money 143 14 The Cointegrating Relationships 148 15 The Coefficient of (d/h-e) 15i 16 One Step residuals and Corresponding equation Standard Errors 151 17 The Break-Point Chow Statistics 152 18 The Coefİcient of Inflation 152 o 19 One Step Residuals and Corresponding equation Standard Errors 152 20 The Break-Point Chow Statistics 153 21 The decreasİng Horizon Chow Test 154 22 The Break-Point Chow Statistics 154 23 One Step Residuals and Corresponding equation Standard Errors 154 24 The decreasing Horizon Chow Test 155 25 The Break-Point Chow Statistics 155 26 One Step Residuals and Corresponding equation Standard Errors 155 Chapter 7.1 The Log of the cpi of Turkey (1980=100 Annual) 170 2 The Growth Rate of cpi's of Turkey 170 3 The Log of the cpi's of Industrial Countries (1980=100 Annual).
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