2011/10/14 by Hakan Yilmazkuday · 1 voice
Economics, Econometrics and Finance · #Monetary Policy and Economic Impact #Economic Theory and Policy #Global Financial Crisis and Policies
paper · doi:10.1080/00036846.2011.608642
openalex publication_date 2011/10/14 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/29
Using a disaggregated level Consumer Price Index (CPI) data, this article compares convergence properties of regional inflation rates in a small open economy, Turkey, between pre-inflation-targeting and inflation-targeting periods, where the latter also corresponds to a flexible exchange rate regime. It is found that during the inflation-targeting period, Turkish regional inflation rates have converged to each other in terms of CPI groups with relatively nontradable components, while they have diverged from each other in terms of CPI groups with relatively tradable components. Since a common and sound monetary policy among the regions of a country is supposed to have a convergence effect on regional inflation rates according to the conventional wisdom, the results for CPI groups with relatively tradable components require further attention and have significant policy implications, especially for inflation-targeting countries using flexible exchange rate regimes.