How Underreporting of Inflation could Harm the Macroeconomy: A Turkey Case Study

https://doi.org/10.65161/recupS2XoY47SZPyl

This paper studies how underreporting inflation harms the economy, with a focus on Turkey. This paper demonstrates how discrepancies between inflation rate reported by the government organisation TÜİK and the independent organisation ENAG could mean a potential underreporting of inflation. Using data from statistical organisations, literature, and survey results, the paper then analyses the detrimental consequences in three distinct branches: income levels, public trust and housing prices. This paper thus calls for higher transparency in inflation reporting, and a more careful consideration for inflation-indexed mechanisms such as unemployment benefits, pensions, and investments.