Asymmetric exchange rate pass-through to food prices in Turkey: A NARDL Approach

This paper investigates the asymmetric exchange rate pass-through (ERPT) to food prices in Turkey from July 2018 to December 2023 using the Nonlinear Autoregressive Distributed Lag (NARDL) model. The study focuses on key food commodities including veal, lamb, poultry, fish, eggs, and milk. By examining the differential impacts of positive and negative exchange rate changes, as well as the roles of other macroeconomic variables such as oil prices, money supply (M2), and the output gap, this research aims to provide a comprehensive understanding of ERPT dynamics in Turkey. Structural breaks are incorporated to account for significant economic disruptions during the study period. The results reveal significant asymmetries in the pass-through effects, with exchange rate fluctuations exerting a pronounced influence on food prices. Oil prices and money supply also play critical roles, while the output gap shows varying effects across different food categories. These findings have important policy implications for managing food price volatility and ensuring food security in Turkey.