Asymmetric pass-through of global inflation to inflation in Türkiye: NARDL approach

Global inflation is defined as the continuous price increases observed worldwide. Understanding the relationship between national inflation and global inflation has become very important for policymakers and market participants in today's global economic structure. There are very limited studies investigating the measurement of global inflation and its effects on local economies. To the best of our knowledge, there is no study addressing the effect of global inflation on inflation of Türkiye. This study investigates the effects of global inflation on inflation of Türkiye using monthly data from 2007 to 2023. It is known that the relationship between many economic variables is asymmetric. In this case, ignoring the relationships between economic variables, even though they are asymmetric, will cause the model specification to be incorrect. Therefore, the econometric analyses to be conducted will not be reliable. Therefore, asymmetry provides a more accurate modeling of many economic events, and its importance in econometric analyses is increasing. Therefore, the nonlinear distributed lag autoregressive (NARDL) model approach is used in the study. The NARDL method has the advantages of the ARDL method due to the extension of the ARDL method to take into account asymmetric relationships. In the modeling, exchange rate, oil prices, policy interest rate, and money supply variables are used as control variables. The findings show that there is a long-term relationship between Turkish inflation and global inflation, interest, money supply, exchange rate, and oil prices under asymmetric effects.