Central Bank of The Republic of Turkey

The expectations obtained from surveys play an important role as leading indicators for the application of the monetary policies. The expectations can be either qualitative or quantitative. The qualitative inflation expectations are gathered from the Business Tendency Survey that is conducted by the Central Bank of the Republic of Turkey. Different methods like Carlson-Parkin method, Balance method, Nonlinear regression method are used to quantify the expectations. The quantification methods are compared with each other. The reliability of the Business Tendency Survey of the Central Bank is also reviewed. The Cronbach α coefficient is used to find the reliability and the survey is found to be highly reliable. Besides, the rationality of the inflation expectations is tested and the formations of the expectations are examined. The formation of inflation expectations is investigated and a proper model cannot be found