Advances in Economics and Business Vol. 5(4), pp. 233 - 237
DOI: 10.13189/aeb.2017.050406
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The Analysis of Actual and Expected Inflation in Turkey


Selçuk Alp 1,*, Elçin Aykaç Alp 2
1 Department of Industrial Engineering, Yildiz Technical University, Turkey
2 Department of Economics, Istanbul Commerce University, Turkey

ABSTRACT

The main objective of the Central Bank is to maintain price stability. Policy objectives set out in this direction and policy instruments used for this purpose can be varied. Inflation expectations are considered to be one of the most important policy instruments used today. Especially in the implementation of the inflation targeting regime, emerges a phenomenon to be studied in as the monitoring of inflation expectations, management, ensuring compliance with set targets. In case of inflation targeting regime implementation; the management, monitoring and meeting targets emerges as a phenomenon to be studied. Since 2002 Central Bank of the Republic of Turkey has been monitoring and publishing its expectations for inflation. Those inflation expectations are followed and published regularly. The publication and monitoring has been through the implementation expectations surveys of the Central Bank of the Republic of Turkey. This paper examines the consistency of the inflation rates with the inflation expectations since 2003. Comparative analysis of the consistency has been analysed by the expectations data for the “current month”, “one month ahead", “two months ahead” and “twelve months ahead” and disclosed for the actual inflation rate and inflation expectations. Markov chains analysis was used to examine this adjustment. The resulting long-term equilibrium (steady state) levels were compared to the expected realization via probabilities.

KEYWORDS
Markov Chain, Expected Inflation, Central Bank Policy

Cite this paper
Selçuk Alp , Elçin Aykaç Alp . "The Analysis of Actual and Expected Inflation in Turkey." Advances in Economics and Business 5.4 (2017) 233 - 237. doi: 10.13189/aeb.2017.050406.