Abstract:

In the last period, the price instability in the Turkish economy has begun to affect the real sector because of the factors that policy makers have identified the factors that cause price instability, and it has become necessary to produce appropriate policies. For this purpose, the study, using quarterly data of the 2006:Q1-2018:Q2 period, the inflation determiners in Turkey are investigated with the ARDL Border Test. In the study, the consumer price index is taken as the indicated variable, while the currency supply, the dollar/TL currency rate, the currency rate rate, the interest rate applied to loans and deposits, the GDP and the budget gap variable were used as the indicative variable. The results from the ARDL Border Test reveal the existence of a long-term relationship between the variables. In the long term, money supply, budget gap and the interest rate applied to need loans are positively linked to inflation, while in the short term, money supply and budget gap (balance) variables are positively linked to inflation. It has been found that the currency currency rate that is included in the study as an uncertainty measure has caused inflation in the short and long term but this effect is statistically meaningless.

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