Turkish Study Reveals Inflation Linked to Price Variability, Impacting Real Income
Relative price variability can lead to inefficiencies in resource allocation and reduce real income. In Turkey from 1994 to 2002, researchers found a positive relationship between inflation and relative price variability. They used detailed data on 103 categories of consumer prices to analyze this relationship. The study showed that higher relative price variability is associated with higher inflation in Turkey. Additionally, inflation was found to cause relative price variability. These findings provide insights into the dynamics of inflation and resource allocation in the Turkish economy during the specified time period.