Get access

EXCHANGE RATE REGIMES AND PASS-THROUGH: EVIDENCE FROM THE TURKISH ECONOMY

Authors

  • HAKAN KARA,

    1. Kara: Research and Monetary Policy Department, Central Bank of Turkey, Istiklal Cad. 10, 06100-Ankara, Turkey. E-mail: hakan.kara@tcmb.gov.tr
    Search for more papers by this author
    • *

      We thank three anonymous referees for valuable comments. All the views expressed in this article are those of the authors and do not necessarily represent the views of the Central Bank of Turkey or its staff.

  • HANDE KÜÇÜK-TUĞER,

    1. Küçük-Tuğer: Research and Monetary Policy Department, Central Bank of Turkey, Istiklal Cad. 10, 06100-Ankara, Turkey. E-mail: hande.kucuk@tcmb.gov.tr
    Search for more papers by this author
    • *

      We thank three anonymous referees for valuable comments. All the views expressed in this article are those of the authors and do not necessarily represent the views of the Central Bank of Turkey or its staff.

  • ÜMIT ÖZLALE,

    1. Özlale: Associate Professor of Economics, Department of Economics, TOBB University of Economics and Technology, Sogutozu, 06560-Ankara, Turkey. E-mail: ozlale@etu.edu.tr
    Search for more papers by this author
    • *

      We thank three anonymous referees for valuable comments. All the views expressed in this article are those of the authors and do not necessarily represent the views of the Central Bank of Turkey or its staff.

  • BURÇ TUĞER,

    1. Tuğer: Research and Monetary Policy Department, Central Bank of Turkey, Istiklal Cad. 10, 06100-Ankara, Turkey. E-mail: burc.tuger@tcmb.gov.tr
    Search for more papers by this author
    • *

      We thank three anonymous referees for valuable comments. All the views expressed in this article are those of the authors and do not necessarily represent the views of the Central Bank of Turkey or its staff.

  • ERAY M. YÜCEL

    1. Yücel: Research and Monetary Policy Department, Central Bank of Turkey, Istiklal Cad.10, 06100-Ankara, Turkey. E-mail: eray@erayyucel.info
    Search for more papers by this author
    • *

      We thank three anonymous referees for valuable comments. All the views expressed in this article are those of the authors and do not necessarily represent the views of the Central Bank of Turkey or its staff.


Abstract

We seek to demonstrate the variations in the exchange rate pass-through (ERPT) and identify the shift in the price-setting behavior by placing the emphasis on the implemented exchange rate and monetary policy regimes. Having a history of several distinct monetary regimes, Turkey exhibits a genuine laboratory in this respect. Our empirical results reveal that the pass-through from exchange rates to domestic prices has changed dramatically. We detect breaks in the pass-through coefficients at three episodes, all of which coincide with a shift in monetary/exchange rate regime, lending support to the view that monetary and exchange rate regimes might be among the major determinants of the ERPT process. (JEL C51, E31, E58)

Ancillary