The Price Gap–Inflation Relationship: Evidence from Türkiye on Validity of the P

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Selçuk Üniversitesi Akşehir Meslek Yüksekokulu Sosyal Bilimler Dergisi
Sayı: 19
The Price Gap–Inflation Relationship: Evidence from Türkiye on Validity of the P–Star Model

The Price Gap–Inflation Relationship: Evidence from Türkiye on Validity of the P–Star Model

Authors : Can Sağlam

Pages : 25-37

View : 75 | Download : 40

Publication Date : 2025-06-30

Article Type : Research Paper

Abstract :The purpose of this study is to examine the P–Star model validity in the Turkish economy. The study covers the period of 2005:04–2019:01 quarterly. The aim of the study is shaped by three fundamental questions. Firstly, is the P–Star model valid for the Turkish economy? Secondly, is the price gap an indicator of potential inflation for the Turkish economy? Thirdly, which monetary aggregate provides optimal direction for policymakers in inflation prediction? In this study firstly, four different price gaps were calculated under monetary aggregates M0, M1, M2, and M3. Secondly, four different P–Star models were estimated by using GMM and the optimal P–Star model was determined. Finally, the validity of P–Star model was tested for the Turkish economy and the empirical findings were discussed in the context of the purpose of the study. In this study, the empirical findings indicate that the P–Star Model is valid in Turkish economy.
Keywords : P–Star Modeli, Enflasyon Oranı, Fiyat Açığı, Parasal Büyüklükler, Enflasyon Göstergesi

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