High inflation in Turkey leads to increased uncertainty, impacting economic stability.
The article examines the relationship between inflation and inflation uncertainty in Turkey from 1923 to 2012. By analyzing annual inflation data, the researchers found that high inflation leads to increased inflation uncertainty in the long run, supporting Friedman's hypothesis. However, in the short term, an increase in inflation uncertainty can actually decrease inflation, supporting the Holland hypothesis. The causality between inflation and inflation uncertainty varied in different time periods, depending on major policy changes in the Turkish economy.