Browsing by Subject "Incomplete pass-through of exchange rate"

Filter results by typing the first few letters
Now showing 1 - 1 of 1
  • Thumbnail Image
    ItemOpen Access
    New Keynesian small open economy: Turkish case
    (2016-06) Ersoy, Sedat
    Turkey experienced substantial declines in inflation after 2002. Was it due to good policy, good luck, or both? To address this question, we incorporate stochastic volatility into a small open new Keynesian model of Monacelli (2005). As demonstrated by Fernandez-Villaverde, Guerron-Quintana, Rubio-Ramirez (2010), volatility shocks are an importance source of macroeconomic fluctuations so they need to be accounted for in order to examine the good luck hypothesis rigorously. Our estimated model suggests that both good policy and good luck played roles in bringing down the inflation.