Abstract:

This study analyzed the impact of the exchange rate on the producer and consumer prices in the Turkish economy. The pass through effect (pass through effect) is the fact that changes in the currency value reflect domestic prices through import. The study analyzed the period in which the value and volatility in the exchange rate were significantly increased (2008:1-2018:12) by the VAR (vector autoregression) method. The impact of the fundamental findings obtained from the study on the producer and consumer prices varies in the short and long term. The transition effect has been more observed in the short period of time. For a long time, it has been more effective in the gun. The excess value loss in the Turkish Lira has led to the fact that domestic goods are relatively cheap to the foreign markets. In this case, in addition to the internal demand, the inflationist pressure has increased along with the external demand. The loss of excess value in the Turkish Lira has made the imports expensive, but it has reduced the demand for imports as a result of the residence of the imported production factors from the country. As a result of this process, the transition effect remains limited in the producer prices. In developing economies which clearly provide growth over its potential like Turkey, the exchange rate is becoming a determining factor for growth and external balance. The increase in the price transition impact has led to the increase in production, which is the main dynamic of the export-based growth strategy. On the other hand, with globalization, the integration between economies has accelerated and the value attributed to national income has begun to be assessed by the parity of purchasing power. As a result, exports have increased on a quantitative basis, but the real income provided from exports in terms of parity of purchasing power has decreased.

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