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An Evaluation Of Inflation Expectations In Turkey

Author

Listed:
  • Baris Soybilgen

    (Istanbul Bilgi University)

  • Ege Yazgan

    (Istanbul Bilgi University)

Abstract
Expectations of inflation play a critical role in the process of price setting in the market. Central banks closely follow developments in inflation expectations to implement a successful monetary policy. The Expectations of inflation play a critical role in the process of price setting in the market. Central banks closely follow developments in inflation expectations to implement a successful monetary policy. The survey is conducted every month. This paper examines the accuracy of these survey predictions using forecast evaluation techniques. We focus on both point and sign accuracy of the predictions. Although point predictions from CBRT surveys are compared with those of autoregressive models, sign predictions are evaluated on their value to a user. We also test the predictions for bias. Unlike the empirical evidence from other economies, our results show that autoregressive models outperform most of inflation expectations in forecasting inflation. This indicates that inflation expectations have poor point forecast accuracies. However, we show that sign predictions for all inflation expectations have value to a user.

Suggested Citation

  • Baris Soybilgen & Ege Yazgan, 2016. "An Evaluation Of Inflation Expectations In Turkey," Working Papers 1601, The Center for Financial Studies (CEFIS), Istanbul Bilgi University.
    • Handle: RePEc:bli:wpaper:1601
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    File URL: https://cefis.bilgi.edu.tr/pdf/CEFIS1601.pdf
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    References listed on IDEAS

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    Cited by:

    1. Alonso, Pablo, 2018. "Creation and Evolution of Inflation Expectations in Paraguay," IDB Publications (Working Papers) 9027, Inter-American Development Bank.
    2. Şule GÜNDÜZ & Seçkin YILDIRIM & Mübeccel Banu DURUKAN, 2020. "An Investigation of the Factors Affecting Inflation Perceptions: A Case Study on Business and Economics Undergraduate Students Abstract: The aim of this study is to investigate the factors behind the ," Sosyoekonomi Journal, Sosyoekonomi Society, issue 28(45).
    3. Cogoljević, Dušan & Gavrilović, Milan & Roganović, Miloš & Matić, Ivana & Piljan, Ivan, 2018. "Analyzing of consumer price index influence on inflation by multiple linear regression," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 505(C), pages 941-944.

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    More about this item

    Keywords

    Inflation Expectations; Evaluation Procedures; Sign Forecast Accuracy;
    All these keywords.

    JEL classification:

    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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