Theoretical and Applied Economics
No. 3 / 2026 (648), Autumn
Credibility erosion and exchange rate pass-through in Türkiye
Kirsehir Ahi Evran University, Türkiye
Okan DADALI
Kirsehir Ahi Evran University, Türkiye
Azra Asel BAYRAK
Kirsehir Ahi Evran University, Türkiye
Abstract. This study aims to examine the impact of the erosion of the Central Bank of the Republic of Türkiye (CBRT)'s credibility on the pass-through of the exchange rates to domestic prices in Türkiye, utilizing data from January 2006 to June 2025. Following the assessment of the stationarity levels of the variables, cointegration is identified in the model, and long-term coefficients are computed. The outputs demonstrate that a rise in exchange rates in Türkiye results in an escalation in domestic prices, and the credibility gap of the CBRT exacerbates this effect. Put differently, the degree of the pass-through of the exchange rates to domestic prices is amplified by a decline in the CBRT’s credibility. The research discusses these findings.
Keywords: Central Bank of the Republic of Türkiye; credibility; credibility gap; exchange rate pass-through; inflation.
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