Asymmetric Effects of Geopolitical Risks on Inflation in Turkey: A Wavelet-Based Analysis

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Politik Ekonomik Kuram
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Asymmetric Effects of Geopolitical Risks on Inflation in Turkey: A Wavelet-Based Analysis

Asymmetric Effects of Geopolitical Risks on Inflation in Turkey: A Wavelet-Based Analysis

Pages : 1392-1405

View : 205 | Download : 675

Publication Date : 2025-12-23

Article Type : Research Paper

Abstract :This study investigates the relationship between geopolitical risks and inflation in Turkey over the period 1985-2023, employing a time-frequency analysis approach. The study utilizes the Global Geopolitical Risk Index (GPR) as the indicator of geopolitical risk and the Consumer Price Index (CPI) as the indicator of inflation. Employing continuous (CWT), cross (XWT), and coherence (WTC) wavelet analyses, the study examines the intrinsic fluctuations of the variables, their co-movements, and correlations within the time-frequency domain. The findings from the wavelet analysis indicate a generally positive relationship between geopolitical risks and inflation in Turkey, which fluctuates across time and different frequencies. Notably, periods such as the Gulf War in the early 1990s, the 2001 economic crisis, and the post-2018 period exhibited a strong association between increased geopolitical risks and inflation. During these periods, significant co-movements (XWT) and high coherence (WTC) were identified between the variables, alongside short-to-medium-term cycles. In contrast, during the period of relative stability in the mid-2000s, the influence of geopolitical risks on inflation diminished. However, following 2018, the relationship has strengthened again, concurrent with an escalation in geopolitical risks faced by Turkey. The study\\\'s conclusions underscore the significance of considering geopolitical risks, exchange rate stability, energy and food security, the management of inflation expectations, and structural reforms in addressing inflation. The research contributes uniquely to the literature on the Turkish economy, by presenting a time-frequency domain analysis.
Keywords : Jeopolitik Risk, Enflasyon, Türkiye Ekonomisi, Wavelet Analizi, Zaman-Frekans Analizi

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