Abstract

http://ssrn.com/abstract=1616159
 
 

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High versus Low Inflation: Implications for Price-Level Convergence


Hakan Yilmazkuday


Florida International University

Mustafa Ege Yazgan


Istanbul Bilgi University

February 3, 2014


Abstract:     
This paper investigates the relationship between the level of inflation and regional price-level convergence utilizing micro-level price data from Turkey during two clearly distinguishable periods of high and low inflation. The results indicate that higher persistence and slower convergence of price levels are evident during the low-inflation period, which corresponds to the inflation-targeting (IT) regime. During the low-inflation IT regime, inflation convergence across regions appears to occur more quickly and may be responsible for the slower pace of convergence in price levels. Overall, IT in Turkey, which was successful in lowering and maintaining inflation at acceptable levels, also appears to be associated with faster convergence in inflation rates at the expense of slower convergence in price levels.

Number of Pages in PDF File: 27

Keywords: Price Convergence, Inflation Convergence, Micro-level Prices, Turkey

JEL Classification: E31, F41

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Date posted: May 26, 2010 ; Last revised: February 4, 2014

Suggested Citation

Yilmazkuday, Hakan and Yazgan, Mustafa Ege, High versus Low Inflation: Implications for Price-Level Convergence (February 3, 2014). Available at SSRN: http://ssrn.com/abstract=1616159 or http://dx.doi.org/10.2139/ssrn.1616159

Contact Information

Hakan Yilmazkuday (Contact Author)
Florida International University ( email )
Miami, FL 33199
United States
Mustafa Ege Yazgan
Istanbul Bilgi University ( email )
Eski Silahtarağa Elektrik Santralı
Silahtarağa Mah. Kazım Karabekir Cad. No: 1 Eyüp
Istanbul, 34060
Turkey
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References:  27

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