IDEAS home Printed from https://ideas.repec.org/a/ris/buecrj/0474.html
   My bibliography  Save this article

The Effects of Exchange Rates on CPI and PPI

Author

Listed:
  • Usupbeyli, Akin

    (Ankara University)

  • Ucak, Sefer

    (Balıkesir University)

Abstract

Strong correlation between exchange rate fluctuations and inflation rates in developing countries makes important to measure the impact of the exchange rate on domestic prices, especially for the countries applying an inflation targeting, like Turkey. Besides, in the countries having high import dependency in energy and intermediate goods, the transition of an increase in the exchange rates to domestic prices is complete. This study examines the effects of exchange rates (US Dollar) fluctuations (ER) on consumer price index (CPI) and producer price index (PPI) between 2003:01-2019:10 in Turkey. As ER series is [I(1)] and CPI and PPI series are [I(0)], ARDL model is applied. Results show that there exists a cointegration between the series and there is a bidirectional causality between CPI and ER; unidirectional relation from ER to PPI. No causality is detected from PPI to ER. When the short-run relationship between ER and CPI is examined, it was found that a depreciation in ER in Turkey causes increase in CPI. Similar results are found for the relation between ER and PPI.

Suggested Citation

  • Usupbeyli, Akin & Ucak, Sefer, 2020. "The Effects of Exchange Rates on CPI and PPI," Business and Economics Research Journal, Uludag University, Faculty of Economics and Administrative Sciences, vol. 11(2), pages 323-334, April.
    • Handle: RePEc:ris:buecrj:0474
    as

    Download full text from publisher

    File URL: https://www.berjournal.com/the-effects-of-exchange-rates-on-cpi-and-ppi
    File Function: Full text
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Golitsis, Petros & Gkasis, Pavlos & Bellos, Sotirios K., 2022. "Dynamic spillovers and linkages between gold, crude oil, S&P 500, and other economic and financial variables. Evidence from the USA," The North American Journal of Economics and Finance, Elsevier, vol. 63(C).
    2. Lidiema, Caspah, 2024. "Monetary-fiscal policy interdependence and pricing dynamics: Empirical estimation of fiscal dominance in Kenya," KBA Centre for Research on Financial Markets and Policy Working Paper Series 83, Kenya Bankers Association (KBA).
    3. Joseph Musandiwa & Collins C. Ngwakwe, 2023. "The Effect of Exchange Rates on Consumer Price Index," Oblik i finansi, Institute of Accounting and Finance, issue 4, pages 47-52, December.

    More about this item

    Keywords

    Exchange Rate; Inflation; Consumer Price Index; Pass Through; ARDL Bounds Test;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • F10 - International Economics - - Trade - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:buecrj:0474. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Adem Anbar (email available below). General contact details of provider: https://edirc.repec.org/data/iiulutr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.