THE NEXUS BETWEEN POPULATION STRUCTURE AND INFLATION IN TURKEY

Nowadays, inflation is one of the most important source of economic stability. The studies on determinants of inflation mainly focus on variables such as economic growth, exchange rate, budget balance, monetary expansion and income inequality. Recently, the literature that emphasizes the impact of population structure which is one of the socio-economic factors on inflation has came into prominence. Especially in developed countries, the deflationary process has started to associate with increase in the share of elderly population. Analyzing this assumed interaction in the context of developing countries also leads to develop the new aspects. In this study, impact of population structure on inflation was investigated for Turkey that has strived with the inflation for a long time, by using the data for the period 1980 and 2017. According to the findings, while the dependent young population affects inflation positively, dependent elderly population affects negatively. Bootstrap Rolling Window causality test results show that there is a two-way relationship between inflation and dependent elderly population, inflation and economic growth, inflation and money supply, and a oneway relationship from dependent young population to inflation.