Inflation and output in the long and short run in Turkey

Yilmaz E.

EMPIRICA, vol.37, no.3, pp.253-269, 2010 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 37 Issue: 3
  • Publication Date: 2010
  • Doi Number: 10.1007/s10663-009-9106-7
  • Journal Name: EMPIRICA
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.253-269
  • Yıldız Technical University Affiliated: Yes

Abstract

This paper firstly discusses the impact of inflation on real output in different theoretical models and then investigates this impact empirically in an economy facing persistent high inflation. We find some evidence of Sidrauski's (Am Econ Rev 57:534-544, 1967) superneutrality of money for Turkey in the long run. However, it seems that inflation affects real output negatively in the short run. These results are more compatible with a class of utility functions in which real money balances and consumption are perfect complements as Asako (Econometrica 51(5):1593-1596, 1983) elucidates.