Ersoy, Sedat2016-07-142016-07-142016-062016-062016-07-12http://hdl.handle.net/11693/30136Cataloged from PDF version of article.Thesis (M.S.): Bilkent University, Department of Economics, İhsan Doğramacı Bilkent University, 2016.Includes bibliographical references (leaves 34-35).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.ix, 35 leaves : charts.Englishinfo:eu-repo/semantics/openAccessIncomplete pass-through of exchange rateParticle filterPruningStochastic VolatilityThesisB153637