The Impact of Inflation Targeting Policy on the Inflation Uncertainty in Turkey

Part of the Contributions to Economics book series (CE)


Turkey represents a potential laboratory experiment in which the performance of an adoption of inflation targeting regime can be studied. Under this perspective, this article tries to evaluate the effect of Inflation Targeting Policy on inflation uncertainty in Turkey after 2001. An empirical analysis based on ARCH-GARCH method is made in order to create inflation uncertainty series. The findings denote that Inflation Targeting Policy is a powerful strategy in eliminating the inflation uncertainty.


Monetary Policy Conditional Variance GARCH Model Inflation Target Inflation Expectation 


  1. Amato JD, Gerlach S (2002) Inflation targeting in emerging market and transition economies: lessons after a decade. Eur Econ Rev 46:781–790CrossRefGoogle Scholar
  2. Bernanke B, Mishkin F (1997) Inflation targeting: a new framework for monetary policy? National Bureau of Economic Research Work Pap, 5893Google Scholar
  3. Bernanke B, Laubach T, Mishkin F, Posen A (1999) Inflation targeting: lessons from the international experience. Princeton University Press, USAGoogle Scholar
  4. Berument H, Yuksel E (2007) Effects of adopting inflation targeting regimes on inflation variability. Physica A 375:265–273CrossRefGoogle Scholar
  5. Bollerslev T (1986) Generalized autoregressive conditional heteroskedasticity. J Econ 31:307–327Google Scholar
  6. Capistran C, Ramos-Francia M (2010) Does inflation targeting affect the dispersion of inflation expectations? J Money Credit Bank 42:113CrossRefGoogle Scholar
  7. Dittmar R, Gavin WT, Kydland FE (1999) Price-level uncertainty and inflation targeting. Fed Reser Bank of St Louis Rev 81:23–33Google Scholar
  8. Engle R (1982) Autoregressive conditional heteroskedasticity with estimates of the variance of UK inflation. Econometrica 50:987–1008CrossRefGoogle Scholar
  9. Ertürk B, Ozlale U (2004) Do inflation targeting regimes reduce inflation uncertainty: evidence from five industrialized countries. Mimeo/Bilkent University, AnkaraGoogle Scholar
  10. Evans M, Wachtel P (1993) Inflation regimes and the sources of inflation uncertainty. J Money Credit Bank 25:475–511CrossRefGoogle Scholar
  11. Gujarati D (2004) Basic econometrics. McGraw-Hill, New YorkGoogle Scholar
  12. Hill C et al (2008) Principles of econometrics, 3rd edn. Wiley, New YorkGoogle Scholar
  13. Johnson DR (2002) The effect of inflation targeting on the behavior of expected inflation: evidence from an 11 country panel. J Monet Econ 49–8:1521–1538CrossRefGoogle Scholar
  14. Johnson DR (2003) The effect of inflation targeting on the level of expected inflation in five countries. Rev Econ Stat 85–4:1076–1081CrossRefGoogle Scholar
  15. Kara HA (2006) Turkish experience with implicit inflation targeting. Resear and Monet Pol Dep Work Pap, 06/03, Central Bank of Turkey, AnkaraGoogle Scholar
  16. Kontonikas A (2004) Inflation and inflation uncertainty in the UK evidence from GARCH modeling. Econ Model 21–3:524–543Google Scholar
  17. Miles W (2008) Inflation targeting and monetary policy in Canada: what is the impact on inflation uncertainty? North Amer J Econ Fin 19:235–248CrossRefGoogle Scholar
  18. Payne EJ (2009) Inflation targeting and the inflation-inflation uncertainty relationship: evidence from Thailand. Appl Econ Lett 16–3:233–238CrossRefGoogle Scholar
  19. Taş KO (2009) Inflation targeting and inflation uncertainty. TOBB University of Economics and Technology, Department of Economics Work Pap, No.: 09–07, AnkaraGoogle Scholar
  20. Vogelvang B (2005) Econometrics: theory and applications with EViews. Financial Times, LondonGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Bandırma Faculty of Economics and Administrative SciencesBalıkesir UniversityBandırma-BalıkesirTurkey
  2. 2.Department of EconomicsRize UniversityRizeTurkey

Personalised recommendations