How Oil Prices Drive Inflation in Turkish Economy: Two Different Channels (original) (raw)
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Inflationary effect of crude oil prices in Turkey
Physica A: Statistical Mechanics and its Applications, 2002
It is generally acknowledged that changes in oil prices a ect economic welfare in ways that are not entirely re ected in transactions in the oil market. In this article, by using the 1990 inputoutput table, the in ationary e ects of crude oil prices are investigated for Turkey. Under ÿxed nominal wages, proÿts, interest and rent earnings, the e ect of increasing prices of oil on in ation is limited. However, when wages and the other three factors of income (proÿt, interest and rent) are adjusted to the general price level that includes the oil price increases, the in ationary e ect of oil prices becomes signiÿcant. Hence, indexation could have very severe e ects on an economy when oil prices increase and, in some cases, could even lead to hyperin ation.
The effects of the oil price and oil price volatility on inflation in Turkey
Energy, 2021
The effects of the oil price and oil price volatility on inflation in Turkey were analyzed via a structural vector autoregression (SVAR) model, using monthly data covering the period between March 1988 and August 2019. The result of variance decomposition indicates that the effects of the oil price and oil price volatility on inflation were limited in the early months but increased over the subsequent months. The labor cost indicates the same e its effect on inflation was limited in the early months but became more significant later. The exchange rate constituted the largest source of changes in inflation, and its impact only slightly decreased in the latter part of the period. According to the result of impulse response functions, the responses of the oil price and exchange rate to inflation were significant in the early months. The response of inflation to labor cost became significant after a few months. The result of this research indicates that following stable economic policies, considering both monetary policy and fiscal policy, provides important dynamics for the control of inflation. Nevertheless, the oil price is an external factor for which alternative ways need to be found in order to reduce its inflationary effect.
In this study, the analysis was that the capacity of creating inflation depends on oil prices as the one of energy types that is a major input of aggregate output which becomes a source of economic growth with increasing in costs. The aggregate output is also a function of energy that is the one of production inputs. Moreover, energy is an imported by several countries because it is acquired from the limited sources around the world. It causes inflation of importing countries to exporting countries through oil prices. At the same time, the rises of oil prices causes inflation because it increases the product costs. The second argument is that the increasing of aggregate output is generally affected by energy use, and is privately affected by oil use. In that case, oil import is both efficient on inflation and on growth. Tested hypothesis in the study is that oil prices have an inflationary effect because of its effect on costs, and is that this activity will negatively affect the gr...
This paper examines the impacts of global oil prices on the current account, investment, growth rate, and inflation in Turkey by using data for 1998:1-2018:1 period and both ARDL and NARDL approaches to cointegration. Our ARDL results clearly show that oil prices have a significant influence on the current account, consistent with expectations. However, it seems that changes in oil prices do not exert a significant influence on the investment and growth rate. Moreover, we also find a robust effect of current account balance (growth rate) on the growth rate (current account balance). We should note that inflation has a negative influence on the growth rate. Additionally, there does not exist any cointegration among our variables when the inflation rate is used as the dependent variable. Using NARDL approach, we report that negative and positive changes in oil prices have a significant effect on the current account balance in only short run. Although it seems that a positive (negative) shock in oil prices ends up lowering the investment (growth) in the short run, our results do not lend any evidence for asymmetric effects of oil prices on investment and growth. Other results obtained from NARDL are very similar to that of our ARDL estimations.
The Effects of Oil Prices Changes on Output Growth and Inflation: Evidence from Turkey
This paper investigates the effects of oil price changes on output and inflation for the case of Turkey using monthly time series data for the period 1990:1-2012:3. Recent studies suggest that oil price changes may have asymmetric effects on the macroeconomic variables. To account for asymmetric effects, we decompose oil price changes into positive and negative parts following Hamilton (1996). Our results show that while oil price increases have clear negative effects on output growth, the impact of oil price decline is insignificant. Similarly, oil price increases have positive and significant effects on inflation. However, oil price declines have not a significant effect on inflation. The Granger causality tests also support these results.
Do Oil Prices Still Matter for Macroeconomic Performance? An ARDL Model for Turkey
Journal of Emerging Economies and Policy, 2023
Understanding the effect of oil price swings on macroeconomic performance is decisive in the analysis for policy makers. This need has made it necessary to conduct sophisticated investigations for researchers since the first OPEC embargo. Analyses that focused on the traditional linear relationship between oil price changes and macroeconomic performance were followed by nonlinear and asymmetrical analyses, as well as ARDL methods, both in developed and developing countries in recent years. To that end, this study aims to investigate the existence of a long-run and short-run relationship between oil prices and economic growth, proxied by industrial production index, consumer price index, and real exchange rates applying ARDL cointegration analysis to monthly data for the 2001:07 and 2023:05 period in Turkey. Results of our empirical model show that industrial production is positively related to oil prices between 2001:07 and 2017:08. However, the relationship between real oil prices and the industraial production index shifts a negative correlation from 2017:09 to 2023:05.
Oil price and inflation in Algeria: A nonlinear ARDL approach
The Quarterly Review of Economics and Finance, 2019
This study examined the relationship between oil price changes and inflation rate in Algeria from 1970-2014. The study method that able to capture for asymmetries in the relationship between oil price and inflation known as nonlinear autoregressive distributed lags (NARDL). The estimated model revealed the existence of nonlinear effect of oil price on inflation. Specifically, we found a significant relation between oil price increases and inflation rate, whereas, a significant relation between oil price reduction and the inflation was absent.
Macroeconomic variables and oil price: evidence from Turkey
2016
The focus of the paper is on the relationship between oil price and macroeconomic variables in the context of Turkey's economy. Macroeconomic variables used in this research are Gross Domestic Product (GDP), Consumer Price Index (CPI), Crude Oil (CROIL), FOREX and Foreign Reserves (FR). The standard time series techniques are applied for the analysis. Our findings based on the above techniques tend to suggest that the FOREX (USD/TL) is the most leading variable followed by GDP and oil price. and does have a significant impact on Turkey's economy. It appears that the oil price follows the exchange rate in that when the American dollar appreciates, the oil price in local currency would go up as the oil price is denominated in US$.