Abstract

Interest, which is as old as the history of humanity, is at the center of life today in parallel with the developments in technology and communication. Predicting the future values of interest, which is very important in every field from state administration to individual investments and expenditures, is very important for individuals/companies/ states to continue their activities in a stable manner. In pioneering studies, it has been emphasized that the main components of interest are real interest and future inflation expectations. Over time, the effects of goods, money, and international markets on the formation of interest have been analyzed theoretically and empirically. The effects of Central Banks on monetary policies and their long-term reflections have been the aim of many studies in recent history. The fact that the expected inflation in interest studies does not reflect the truth for many times has prevented the right results from being found. For this reason, it is seen that the realized CPI is generally used in estimating the interest rate. In addition, when countries are examined, it is seen that there are significant differences between CPI and PPI. The aim of this study is to empirically investigate which of the CPI and PPI values realized in estimating the interest rate should be used and to what extent.

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