A Small macroeconomic model of the Turkish economy

Abstract

ABSTRACT The present study attempts to examine the relationships among output, price level, interest rates, money supply and inflation, with a special focus on the question of whether the fiscal expansion is inflationary. These relationships are examined, first with a Vector Autoregression Model, using monthly data on Turkish Economy. Then, a structural model, using annual data is formed and estimated. The preliminary results indicate that the growth of government expenditures is among the most important sources of and has both direct and indirect impacts on inflation.