İlhan KÜÇÜKKAPLAN, Hüseyin AĞIR, Çağın KARUL, Ahmet KONCAK

Structural Changes and Purchasing Power Parity in Turkish Exchange Rates

We re-examine the purchasing power parity (PPP) hypothesis for Turkey by concentrating on modelling structural changes as sharp (with dummy variables) and smooth (with a Fourier approximation) process. The results show (i) more evidence in favor of PPP hypothesis when structural changes are taken into account and (ii) modelling the shifts with different approaches plays a crucial role for policy implications.

Anahtar Kelimeler:

PPP hypothesis, Structural shifts, Turkey

Structural Changes and Purchasing Power Parity in Turkish Exchange Rates

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