The Effects of Inflation and Interest Rates on Inequality in Turkey


Inequality must be analyzed in detail and the factors affecting inequality must be revealed because inequality determines injustice in the distribution of social welfare. The distribution of GDP as well as the formation of it is a very important issue for a country's economy. Turkey has long been struggling with the problem of inflation and the trible deficit (trade deficit, budget deficit, and savings gap) which makes the economy vulnerable. The years when price stability was maintained throughout the history of the Republic are exceptions. Although the problem of debt caused by triple deficit causes the emergence of the crises from time to time, it also causes a significant amount of monetary resources to change hands. Turkey is carrying out foreign investment in economic growth but with high interest rates. The aim of this study is to determine whether Turkey is a relationship between inequality and inflation and interest rates. VAR analysis was used as a method. Inflation data were obtained from the World Bank database, Gini data representing inequality from Solt (2019), and interest data from Louis Federal Reserve Bank. According to the findings, it is concluded that there is no strong relationship between Gini Coefficient and inflation and real interest.


Inequality inflation interest rate VAR analysis Turkey