Weaker Currency Means Higher Prices for Turkish Consumers
Exchange rate pass-through to consumer prices is important for understanding inflation in small open economies like Turkey. A study from 2006 to 2015 found that the traditional model used for this analysis gives inaccurate results due to unrealistic assumptions. By using a different model, researchers found that exchange rate pass-through in Turkey is around 18 percent. This shows the need for realistic models when studying this relationship in small open economies.