Exchange Rate Regimes and Pass-Through: Evidence from the Turkish Economy

20 Pages Posted: 9 Mar 2007

See all articles by Hakan Kara

Hakan Kara

Central Bank of Turkey; Bilkent University

Hande Kucuk-Tuger

Government of the Republic of Turkey - Research and Monetary Policy Department

Ümit Özlale

TOBB University of Economics and Technology

Burc Tuger

Government of the Republic of Turkey - Research and Monetary Policy Department

Eray M. Yucel

Government of the Republic of Turkey - Research and Monetary Policy Department

Abstract

We seek to demonstrate the variations in the exchange rate pass-through (ERPT) and identify the shift in the price-setting behavior by placing the emphasis on the implemented exchange rate and monetary policy regimes. Having a history of several distinct monetary regimes, Turkey exhibits a genuine laboratory in this respect. Our empirical results reveal that the pass-through from exchange rates to domestic prices has changed dramatically. We detect breaks in the pass-through coefficients at three episodes, all of which coincide with a shift in monetary/exchange rate regime, lending support to the view that monetary and exchange rate regimes might be among the major determinants of the ERPT process.

Suggested Citation

Kara, A. Hakan and Kucuk-Tuger, Hande and Özlale, Ümit and Tuger, Burc and Yucel, Eray M., Exchange Rate Regimes and Pass-Through: Evidence from the Turkish Economy. Contemporary Economic Policy, Vol. 25, No. 2, pp. 206-225, April 2007, Available at SSRN: https://ssrn.com/abstract=969102 or http://dx.doi.org/10.1111/j.1465-7287.2007.00037.x

A. Hakan Kara (Contact Author)

Central Bank of Turkey ( email )

Istiklal Cad. 10 Ulus
06100 Ankara
Turkey

Bilkent University ( email )

Bilkent, Ankara 06533
Turkey
06800 (Fax)

Hande Kucuk-Tuger

Government of the Republic of Turkey - Research and Monetary Policy Department ( email )

Istiklal Cd. No: 10 Ulus
Ankara, 06100
Turkey

Ümit Özlale

TOBB University of Economics and Technology ( email )

Department of Economics
06560-Ankara, Sogutozu
Turkey

Burc Tuger

Government of the Republic of Turkey - Research and Monetary Policy Department ( email )

Istiklal Cd. No: 10 Ulus
Ankara, 06100
Turkey

Eray M. Yucel

Government of the Republic of Turkey - Research and Monetary Policy Department ( email )

Istiklal Cd. No: 10 Ulus
Ankara, 06100
Turkey

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