Openness and inflation: The Turkish case

ABSTRACT The Turkish economy has followed a rapid openning process after 1980. In this period, there is also an ongoing inflation dilemma originating from the 1970s. Many studies in the field put forward that there are different determinants of this high and kronic inflation. Analysis of the relationship between openness and inflation can provide new insights into both eplaining inflationary process and evaluating economic policies practised. The aim of this study is to analise the relationship between openness and inflation in Turkey. In this regard, the relationship between openness and inflation has been firstly analysed in a theoretical manner that policymakers and private economic agents react in a strategic environment. Then, an econometric application which was based on a model built in this frame has been made. The study in hand consists of three sections. In the fist section, definitions related to the topic have been made and theoretical approachs have been surveyed. Section two is devoted to model the openness-inflation relationship. In the last section, the model has been applied to the data and then empiric results have been concluded with the economic policy evaluations. vn