Abstract

Steve Hanke, professor of applied economics at Johns Hopkins University, who is renowned for his scientific studies on hyperinflation, says that the probability of hyperinflation in Turkey is pretty low from a statistical point of view. “The prospect of hyperinflation in Turkey is not impossible. Turkey has an endemic ‘high’ inflation problem because it is a country with very weak institutions and a central bank (TCMB) with a very bad record.

As the record of the TCMB is poor, according to Hanke, the only way to ensure that Turkey will have relatively low inflation and low-interest rates is to do precisely what he did in Bulgaria with the Bulgarian National Bank. “The law governing the Bulgarian National Bank was changed to a currency board law, one that eliminated the possibility of monetary policy discretion and mischief. This has served Bulgaria extremely well for the past 25 years,” he said.

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