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Oil prices and current account: A structural analysis for the Turkish economy

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  • Özlale, Ümit
  • Pekkurnaz, Didem

Abstract

Although there has been an increasing number of studies about the effects of oil prices on the macroeconomic performances, the literature on the interaction between oil prices and current account is limited, especially for oil importing developing countries. This paper analyzes the impact of oil prices on the current account balances for the Turkish economy using a structural vector autoregression model. Our model allows us to identify the net effect of oil prices on current account balances after controlling for other factors such as output gap and exchange rate misalignment. The results show that the response of current account ratio to oil price shock increases gradually up to the first three months and then starts to decrease, which indicates a significant effect of oil price shocks in the short-run. Moreover, when the obtained structural shocks are employed in a simple regression analysis, the parameter regarding the oil price shocks is found to be negative and statistically significant. The final section discusses the policy implications of the results.

Suggested Citation

  • Özlale, Ümit & Pekkurnaz, Didem, 2010. "Oil prices and current account: A structural analysis for the Turkish economy," Energy Policy, Elsevier, vol. 38(8), pages 4489-4496, August.
  • Handle: RePEc:eee:enepol:v:38:y:2010:i:8:p:4489-4496
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    References listed on IDEAS

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    Cited by:

    1. Nuray Terzi & Sadullah Celik, 2016. "Oil Prices And Trade In Turkey: A Wavelet Continuous Transform Analysis," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 4(4), pages 29-41.
    2. Hamdi, Helmi & Sbia, Rashid, 2013. "Dynamic relationships between oil revenues, government spending and economic growth in an oil-dependent economy," Economic Modelling, Elsevier, vol. 35(C), pages 118-125.
    3. Olcay Yucel Culha & Mustafa Utku Ozmen & Erdal Yilmaz, 2015. "Petrol Fiyatlarinin Ihracat Uzerindeki Etkisi," CBT Research Notes in Economics 1510, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    4. Tiwari, Aviral Kumar & Mutascu, Mihai Ioan & Albulescu, Claudiu Tiberiu, 2013. "The influence of the international oil prices on the real effective exchange rate in Romania in a wavelet transform framework," Energy Economics, Elsevier, vol. 40(C), pages 714-733.
    5. Gnimassoun, Blaise & Joëts, Marc & Razafindrabe, Tovonony, 2017. "On the link between current account and oil price fluctuations in diversified economies: The case of Canada," International Economics, Elsevier, vol. 152(C), pages 63-78.
    6. Zied Ftiti & Aviral Tiwari & Ibrahim Fatnassi, 2014. "Oil price and macroeconomy in India – An evolutionary cospectral coherence approach," Working Papers 2014-68, Department of Research, Ipag Business School.
    7. Kirsten Roach, 2014. "Un análisis estructural de los choques de precios del petróleo en la macroeconomía de Jamaica," Monetaria, Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 233-271, julio-dic.
    8. Troster, Victor & Shahbaz, Muhammad & Uddin, Gazi Salah, 2018. "Renewable energy, oil prices, and economic activity: A Granger-causality in quantiles analysis," Energy Economics, Elsevier, vol. 70(C), pages 440-452.
    9. Kirsten Roach, 2014. "A Structural Analysis of Oil Price Shocks on the Jamaican Macroeconomy," Monetaria, Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 217-252, July-Dece.
    10. Tuzova, Yelena & Qayum, Faryal, 2016. "Global oil glut and sanctions: The impact on Putin’s Russia," Energy Policy, Elsevier, vol. 90(C), pages 140-151.
    11. Priyanshi Gupta & Anurag Goyal, 2015. "Impact of oil price fluctuations on Indian economy," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 39(2), pages 141-161, June.
    12. Vasif Abiyev & Reşat Ceylan & Munise Ilıkkan Özgür, 2015. "The Effects of Oil Price Shocks on Turkish Business Cycle: A Markov Switching Approach," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 8(2), pages 7-18, October.
    13. Yeliz Yalcin & Cengiz Arikan & Furkan Emirmahmutoglu, 2015. "Determining the asymmetric effects of oil price changes on macroeconomic variables: a case study of Turkey," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(4), pages 737-746, November.
    14. Shahbaz, Muhammad & Sarwar, Suleman & Chen, Wei & Malik, Muhammad Nasir, 2017. "Dynamics of electricity consumption, oil price and economic growth: Global perspective," Energy Policy, Elsevier, vol. 108(C), pages 256-270.
    15. Akpaeti, Aniekan Jim, 2. "Does Financial Sector Reforms Affect Agricultural Investments In Nigeria? A Cointegration And Var Approach," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 1.
    16. Amira Karimova & Ahmet Caliskan & Jamshid Karimov, 2015. "Dollarization and External Sustainability of Turkey," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 3(2), pages 1-11.
    17. repec:ipg:wpaper:2014-068 is not listed on IDEAS
    18. Suleyman ACIKALIN & Erginbay UGURLU, 2014. "Oil Price Fluctuations and Trade Balance of Turkey," International Conference on Economic Sciences and Business Administration, Spiru Haret University, vol. 1(1), pages 6-13, December.
    19. Altinay, Galip & Karagol, Erdal, 2004. "Structural break, unit root, and the causality between energy consumption and GDP in Turkey," Energy Economics, Elsevier, vol. 26(6), pages 985-994, November.
    20. Hassan, Syeda Anam & Zaman, Khalid, 2012. "Effect of oil prices on trade balance: New insights into the cointegration relationship from Pakistan," Economic Modelling, Elsevier, vol. 29(6), pages 2125-2143.
    21. Cagatay Basarir & Mehmet Emin Ercakar, 2016. "An Analysis of the Relationship between Crude Oil Prices, Current Account Deficit and Exchange Rates: Turkish Experiment," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(11), pages 48-59, November.

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