Validity of the Phillips Curve in Türkiye: Wavelet Transform Coherence (WTC) Analysis

Inflation and unemployment, which play a crucial role in ensuring economic stability, have a complex relationship with each other. In this context, the aim of this study is to examine the validity of the Phillips curve in Türkiye by using the variables of general unemployment rate, male unemployment rate, female unemployment rate, Consumer Price Index (CPI), CPI measured by prices of goods and CPI measured by prices of services sector covering the period 2005:1-2024:8. In the analysis part of the study, the stationarity of the variables is tested with the Fractional Frequency Fourier ADF (FFFADF) unit root test. The validity of the Phillips curve between CPI variables and unemployment variables is analyzed separately by Wavelet Transform Coherence (WTC) analysis. When the results of the analysis are analyzed in general, it is concluded that the Phillips curve is not valid in the Turkish economy. Based on the findings, policymakers in the Turkish economy should focus on supply-side policies such as tax cuts and incentives for technological innovations and structural reforms such as increasing the flexibility of the labor market and organizing vocational training programs.