Business Cycle Analysis in the Turkish Economy (1998-2011): Hodrick-Prescott Filter

Abstract

It is important that cyclical properties areexaminedat the macroeconomicstructure. When it is thought that there is a chronic inflationary atmospherein Turkisheconomy; during the examination of this relationship, real national incomeand inflation are two pretty good appropriate variables in explaining cyclicalproperties. In the study, parsingmethod, which was suggested by Hodrick Prescott(HP), was used. During the analysis of business cycles; in HP filter, since theoptimal parameter selection is necessary and important, the findings of 1998Q1-2011Q2 review period were compared by selecting λ=1600, λ=98 and λ=1values.All in all, it has seen that applied optimal λ parameter must be under 1600 valuefor Turkey.