This lecture compares recent inflation dynamics in Türkiye and the United States to explore how political pressures and institutional credibility shape inflation expectations and policy effectiveness.

Over the past several years, both Türkiye and the United States have experienced episodes of rising inflation, but through markedly different institutional pathways. This lecture offers a comparative analysis of how political dynamics, and the strength of economic institutions have influenced inflation outcomes in both countries.

In Türkiye, a period of sustained inflation and currency volatility has coincided with weakening institutional independence and persistent questions about policy credibility. In the US, by contrast, inflation surged amid pandemic-era disruptions and aggressive fiscal stimulus, but it was the political debate around central bank independence and debt sustainability that began to raise questions about long-term inflation control.

By examining these two cases side by side, the lecture will explore broader global themes: how inflationary pressures are amplified when institutions are politicized, and how durable inflation control depends not only on interest rates and monetary tools, but on the credibility of the institutions behind them. 

Key questions to be addressed:

• How does the erosion (or strengthening) of institutional credibility shape inflation expectations?
• Why do similar inflationary symptoms emerge in countries with different economic fundamentals when political uncertainty rises?
• What can Türkiye and the U.S. learn from each other’s recent experiences?
• Can institutional repair reverse entrenched inflation expectations?

Speaker:

Selva Demiralp (@SelvaDemiralp) is a professor of economics at Koç University, Director of the Koç University-TUSIAD Economic Research Forum, and a founding partner at Ethos Economics Consulting. She was an economist at the Federal Reserve Board between 2000 and 2005, after which she joined the Economics department at Koç University. From 2013 to 2019, she wrote weekly articles for Milliyet (one of the major Turkish newspapers), and she currently writes for BBC Turkish News.

Over the past decade, Demiralp has extensively interacted with several central banks, including the Federal Reserve, European Central Bank, and the Central Bank of Türkiye. She worked as a consultant for the ECB. Demiralp received highly competitive grants for her research on monetary policy, including the European Commission's International Outgoing Fellowship (IOF) and numerous grants from the Scientific and Technological Research Council of Türkiye (TUBITAK).

Demiralp’s research has been published in leading economic journals, including The Journal of Money, Credit, and Banking and The Journal of Economic Dynamics and Control. Her views on the Turkish economy appear in The Wall Street Journal, The New York Times, The Financial Times, Reuters, and The Associated Press.

Discussant:

Orkun Saka (@_OrkunSaka) is a visiting senior fellow, European Institute, LSE and an Associate Professor (Senior Lecturer) in Economics at the City, University of London.

Chair: 

Yaprak Gürsoy (@ygursoy) is Professor of European Politics and Chair of Contemporary Turkish Studies at LSE. 

More about this event

Contemporary Turkish Studies focuses on the politics and economy of Türkiye and its relations with the rest of Europe. The programme aims to promote a deeper understanding of contemporary Türkiye through interdisciplinary and critical research, teaching and related public activities.

Hashtag for this event: #LSETürkiye 

You can either download the podcast or watch the video of this event online. For access to podcasts and videos from other CTS events, visit the past event pages.