Enflasyon Belirsizliği ve Friedman-Ball Hipotezi: Türkiye Örneği

Abstract

Friedman-Ball's hypothesis draws attention to the invisible additional costs of inflation, which results from increasing inflation uncertainty. The hypothesis argues that there is a positive relationship between inflation and inflation uncertainty, and that increasing inflation brings along more inflation uncertainty due to an asymmetric information problem. In the literature, discussions about the relationship between inflation and inflation uncertainty started with Okun (1971), Gordon (1971), and continued with Friedman (1977), Ball (1992). At the present, interest in this issue has decreased significantly, due to the fact that inflation rates are at moderate levels in most countries and are even negative (deflation) in a small number of countries.
 In some countries including Turkey, however, the inflation problem and its resulting costs remain as current and active topics. Indeed, there exist significant literature about whether or not the Friedman-Ball hypothesis is valid for the Turkish economy. Some of the most important studies about the inflation and the resulting uncertainty in Turkey are done by Neyaptı and Kaya (2001), Berüment, et al. (2003).
 The motivation and the purpose of this study is updating the research on the high inflation and inflation uncertainty, the resulting costs with respect to macroeconomic variables such as investments and production, which may hinder the long-run economic growth performance in Turkey. This study examines new evidence about the validity of the Friedman-Ball hypothesis for the Turkish economy utilizing data over the period of 1985:01 – 2020:12. The results of the TGARCH and EGARCH models verify the validity of the Friedman-Ball hypothesis for Turkey and indicate that high inflation increases inflation uncertainty both in the short- and long-run. Overall, the analyses point out to the importance of striving against inflation because the problem may be more than just high inflation due to its aforementioned invisible additional costs.