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Inflationary effect of crude oil prices in Turkey

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Author Info

  • Berument, Hakan
  • Taşçı, Hakan

Abstract

It is generally acknowledged that changes in oil prices affect economic welfare in ways that are not entirely reflected in transactions in the oil market. In this article, by using the 1990 input–output table, the inflationary effects of crude oil prices are investigated for Turkey. Under fixed nominal wages, profits, interest and rent earnings, the effect of increasing prices of oil on inflation is limited. However, when wages and the other three factors of income (profit, interest and rent) are adjusted to the general price level that includes the oil price increases, the inflationary effect of oil prices becomes significant. Hence, indexation could have very severe effects on an economy when oil prices increase and, in some cases, could even lead to hyperinflation.

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File URL: http://www.sciencedirect.com/science/article/pii/S0378437102010257
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Bibliographic Info

Article provided by Elsevier in its journal Physica A: Statistical Mechanics and its Applications.

Volume (Year): 316 (2002)
Issue (Month): 1 ()
Pages: 568-580

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Handle: RePEc:eee:phsmap:v:316:y:2002:i:1:p:568-580

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Web page: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/

Related research

Keywords: Oil prices; Inflation; Input–output analysis;

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Cited by:
  1. Suzuki, Kengo & Uchiyama, Yohji, 2010. "Quantifying the risk of an increase in the prices of non-energy products by combining the portfolio and input-output approaches," Energy Policy, Elsevier, vol. 38(10), pages 5867-5877, October.
  2. Chang, Ting-Huan & Huang, Chien-Ming & Lee, Ming-Chih, 2009. "Threshold effect of the economic growth rate on the renewable energy development from a change in energy price: Evidence from OECD countries," Energy Policy, Elsevier, vol. 37(12), pages 5796-5802, December.
  3. AydIn, Levent & Acar, Mustafa, 2011. "Economic impact of oil price shocks on the Turkish economy in the coming decades: A dynamic CGE analysis," Energy Policy, Elsevier, vol. 39(3), pages 1722-1731, March.
  4. Chen, Zhan-Ming, 2014. "Inflationary effect of coal price change on the Chinese economy," Applied Energy, Elsevier, vol. 114(C), pages 301-309.
  5. Wu, Libo & Li, Jing & Zhang, ZhongXiang, 2013. "Inflationary effect of oil-price shocks in an imperfect market: A partial transmission input–output analysis," Journal of Policy Modeling, Elsevier, vol. 35(2), pages 354-369.
  6. Aykut Kibritcioglu, 2005. "Recent Increases in Prices of Oil Products and their Possible Effects on the 2001-2002 Disinflation Program in Turkey (in Turkish)," Macroeconomics 0506014, EconWPA.
  7. C. Emre Alper & Orhan Torul, 2009. "Asymmetric Effects of Oil Prices on the Manufacturing Sector in Turkey," Working Papers 2009/06, Bogazici University, Department of Economics.

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