It has become increasingly important to identify the structural factors causing rigidities and persistencies in inflation that limit the effectiveness of monetary policy and to seek alternative solutions in combating inflation. To that end, the Structural Economic Research Department was established on the 28 June 2016. Even though this new Department does not have an equivalent in traditional central banking, it has become the first example for central banking in terms of approaching structural economic problems.

The Department’s activities in 2016 can be summarized in four categories: (1) work on the Food and Agricultural Product Markets Monitoring and Evaluation Committee, (2) in-depth field studies on the sectoral and regional levels of the real economy, (3) supporting work on the policymaking processes, and (4) research activities.

On 20 June 2016, the Economy Coordination Board convened to deliberate issues relating to inflation in food prices and decided that the coordination and the secretariat of the Food and Agricultural Product Markets Monitoring and Evaluation Committee should henceforth be a responsibility of the Central Bank of the Republic of Turkey. Following this decision, the CBRT presented a comprehensive agenda and work schedule during the meeting of the Committee on 26 October 2016 headed by the Deputy Prime Minister Mehmet Şimşek.

The Directive of the Prime Minister numbered 2016/30 related to the restructuring of the Committee was published on the Official Gazette dated 27 December 2016, numbered 29931. The Directive states that the applications of the decisions taken by the Committee will be monitored and coordinated by the CBRT.

Following the publication of the Directive, structural economic analyses and policy suggestions derived from them were presented by the CBRT at the meeting of the Committee on 30 December 2016 headed by the Deputy Prime Minister Mehmet Şimşek. The summary of the Committee work is posted regularly on the CBRT website.

The analyses from the perspective of price stability and monetary policy covered a variety of structural issues in the Turkish economy including economic growth, productivity, labor markets, foreign trade, balance of payments, public finance, human capital investments, R&D investments, infrastructure investments, entrepreneurship, education and migration. Additionally, regional and sectoral information on the corporate sector has been compiled, and the effective use of this aggregated information in monetary policy decision- making process has been ensured.

In addition, in-depth research and analyses were conducted to identify the structural factors that cause rigidities and persistencies in inflation and to collaborate with related institutions in support of the policy making process.