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How Oil Prices Drive Inflation in Turkish Economy: Two Different Channels

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  • Bilgin BARÄ°
  • Zafer ADALI

Abstract

This study analyzes the impact of changes in oil prices on consumer inflation in Turkey. We compare the effects of the changes in crude oil and gasoline prices on the consumer prices. These effects differ symmetrically and asymmetrically for the period 2009:01-2020:04. For this purpose, inflationary effects are estimated using linear and non-linear ARDL models. According to the findings, changes in both oil and fuel prices have asymmetric effects on inflation in the short run. Both models explain the changes in consumer inflation with the increases in oil prices in the long run. The result indicates that the decreases in oil prices are not taken into account in pricing decisions.

Suggested Citation

  • Bilgin BARÄ° & Zafer ADALI, 2020. "How Oil Prices Drive Inflation in Turkish Economy: Two Different Channels," Fiscaoeconomia, Tubitak Ulakbim JournalPark (Dergipark), issue 3.
    • Handle: RePEc:fis:journl:200310
    DOI: 10.25295/fsecon.786956
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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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