Globalization and Inflation

OpenAlex İngilizce

The Turkish economy, particularly during and after the 1990s, has faced with greater levels of inflation, which began to decline following the 2001 banking crisis due to major shift in policymaking within Turkey's political and economic framework. When the global economy is considered, however, substantial globalization has transpired, resulting in a worldwide disinflation trend. Therefore, the question of "How did the global disinflationary period affect the overall performance of Turkey's price stability policy?" has gained prominence as a pertinent one. The primary objective of this article is to examine the impact of globalization on inflation in Turkey within this paradigm. In addition to analyzing volatile patterns in Turkish inflation from 2003 to 2020, the relevance of domestic and international factors will be empirically investigated through structural VAR analysis. Our findings reveal that, domestic prices are explicitly correlated with the globalization through global demand circumstances, imported input costs and foreign currency shifts all of which contribute significantly to price fluxes. Nevertheless, it is imperative to stress that inflation inertia is a crucial aspect of measuring inflation.