THE RELATIONSHIP OF INFLATION EXPECTATIONS ADJUSTED TO DIFFERENT LEVELS WITH CAPITAL AND MONETARY VARIABLES

This study seeks to answer the question of which macroeconomic variables are used as determinants by individuals with low expectations and individuals with high expectations. For this purpose, inflation expectations were divided into three categories: 0 to 20, 20 to 40 and over 40. In this way, low, medium and high inflation expectations were obtained. The aim was to determine the relationship between different inflation expectations and macroeconomic variables. The study used monthly data for the period 2013-2023. The Phillips-Ouliaris co-integration method was used to determine the long-run relationship and DOLS and FMOLS estimators were used to estimate the long-run coefficients. The results show that the variables credit interest, money supply, inflation and stocks are determinants of low inflation expectations, the exchange rate, money supply and inflation are determinants of medium inflation expectations and the exchange rate, credit interest, money supply, inflation and deposit interest are determinants of high inflation expectations. Two points stand out. The first is that when long-term coefficients are evaluated, the coefficients take insignificantly low values in low inflation expectations. This result indicates that individuals expecting low inflation do not establish a strong sensitivity despite taking into account capital and money variables. The second point is that the capital variable stock is statistically insignificant in medium and high inflation expectations. This result indicates that only monetary variables are taken into account in medium and high inflation expectations.