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The Inflationary Effect of Price Increases in Oil Products in Turkey

Author

Listed:
  • Osman PEKER

    () (Adnan Menderes Universitesi, Iktisadi ve Idari Bilimler Fakultesi, Iktisat Bolumu)

  • Mehmet MERCAN

    () (Hakkari Universitesi, Iktisadi ve Idari Bilimler Fakultesi, Iktisat Bolumu)

Abstract

In this study, the inflationary effect of price increases in oil products was investigated for Turkey’s economy using monthly data for the period 1996 - 2009. According to the empirical evidence obtained from the study made with bounds testing approach developed by Pesaran et al. (2001), co-integration relationship between the variables have been determined. Accordingly, in the long-term analysis, inflationary effect of price increases of oil products was found positive and statistically significant in line with theoretical expectations. In its short-term analysis, coefficient of the error correction term was found statistically significant and negative. Therefore, deviations occured between the variables converge to long-term equilibrium level.

Suggested Citation

  • Osman PEKER & Mehmet MERCAN, 2011. "The Inflationary Effect of Price Increases in Oil Products in Turkey," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 11(4), pages 553-562.
  • Handle: RePEc:ege:journl:v:11:y:2011:i:4:p:553-562
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    References listed on IDEAS

    as
    1. Paresh Kumar Narayan & Russell Smyth, 2006. "What Determines Migration Flows From Low-Income To High-Income Countries? An Empirical Investigation Of Fiji-U.S. Migration 1972-2001," Contemporary Economic Policy, Western Economic Association International, vol. 24(2), pages 332-342, April.
    2. Kamas, Linda & Joyce, Joseph P., 1993. "Money, income and prices under fixed exchange rates: Evidence from causality tests and VARs," Journal of Macroeconomics, Elsevier, vol. 15(4), pages 747-768.
    3. Tatom, John A., 1988. "Are the macroeconomic effects of oil-price changes symmetric?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 28(1), pages 325-368, January.
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    More about this item

    Keywords

    Oil product prices; crude oil prices; bounds testing approach; Turkey;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L70 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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