Büyük ve açık ekonomiler için Yeni Keynesyen Phillips Eğrisinin ampirik bir analizi: G7 ülkeleri örneği

The main aim of this study is to investigate inflation dynamics in large and open countries by using the closed and open economy New Keynesian Phillips Curve (NKPC) models considering the openness degree and economic size of countries. Even though the open economy NKPC models include foreign trade factors as openness parameters, these models do not take into account the economic size of countries. However, the foreign trade elasticity of the domestic marginal cost in open and large countries is usually higher than in open and small countries due to scale economies. High foreign trade elasticity of domestic marginal cost might lead to insignificant openness parameters in estimations of open economy models without considering the economic size for open and large countries. In addition, in the empirical literature, whereas the closed economy NKPC models appear to better explain the dynamics of inflation in some open and large countries, the open economy NKPC models appear to better explain inflation dynamics in open and small countries. Therefore, the impact of foreign trade factors as openness parameters on domestic inflation might depend on not only openness degree but also the economic size of countries. Since the number of studies focused on inflation dynamics of only large and open countries is limited, a consensus regarding the impact of economic size on the role of foreign trade factors on domestic inflation has not been achieved for large and open economies. In this sense, an orderly analysis is needed to determine which model better explains the inflation dynamics in open and large countries considering both openness degree and economic size of countries. In this study, two closed economy and three open economy versions of NKPC models are estimated by the Generalized Method of Moments (GMM) to investigate inflation dynamics for open and large countries considering the economic size as well as openness degree. The sample of large and open economies subject to empirical analysis in this study involves G7 countries. The so-called NKPC models are estimated for G7 countries both individually and as a group over the two different sample periods. The first sample period covers all available data and the second starts with the introduction of inflation targeting regime for each G7 country. The estimation results show that openness parameters in estimations of open economy models are either statistically insignificant or incorrectly signed for large and open countries. Considering estimated explanatory variables in the models, the closed economy models better explain inflation dynamics in open and large countries. The structural parameters regarding domestic factors such as expected inflation and real economic activities are more significant and correctly signed in closed economy models. Among open economy models, the open economy model, which uses the real effective exchange rate as an openness parameter instead of the relative price of imports, is more successful in explaining the inflation dynamics in open and large countries. The inflation process in large and open countries is based on both forward-looking and backward-looking expectations. In addition, the price rigidity and duration of price adjustment of domestic firms significantly increased in G7 countries during the inflation targeting regime.