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Costs of Inflation - Living with rampant inflation in Turkey

Graham Watson

21st April 2022

This Observer article is an excellent insight into the costs of inflation, with the Turkish economy experiencing inflation of over 60%.

It illustrates how inflation's costs are most severe for those on fixed incomes, such as state pensions, such as the old man who has come out of retirement, and how the profit margins of firms are being squeezed because they know that their customers are going to struggle to pay higher prices.

It also shows how bad policymaking can help stoke inflation, with President Erdogan's inability to grasp fundamental macroeconomics, and his unwillingness to listen to his advisors (or a lack of frankness of their part). Low interest rates aren't going to help the Turkish economy at the moment.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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