The effect of inflation uncertainty on inflation; The case of Turkey

In this study, from 1923 to the present it is analyzed the development of inflation in Turkey. The study also examined the effects of inflation on inflation uncertainty in Turkey. In this study, the uncertainty of inflation was obtained with the variance series obtained from the EGARCH model estimates for autoregressive inflation models. The relationship between inflation uncertainty and inflation series is estimated by VAR model. According to the results, the positive effect is seen on inflation and high inflation uncertainty in Turkey. Moreover, it is concluded that inflation uncertainty triggers inflation uncertainty and causes high inflation. According to the results of the study, the development of policies to reduce inflation uncertainty by the central bank or economic authority will have a positive effect on inflation.