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Oil Price Fluctuations and External Balances of Turkey: 2000-2013
Suleyman ACIKALIN, Erginbay UĞURLU

Last modified: 2016-01-06

Abstract


The relationship between oil price fluctuations and external balances of Turkey is the main concern of this paper. Economic growth performance of Turkey depends on imported capital goods as well as oil. Oil price increases bring a heavy burden for Turkish economy since Turkey is an oil-importing developing economy. Therefore, it is important to analyze the effects of oil price increases on external balances as well as on economic growth rate. We aim to examine the effects of imported oil price fluctuations on Turkey’s trade and current account balances using structural vector autoregression (VAR) model in this paper. Monthly data set for the period of 2000-2012 is used in this study. In order to capture the net effects of imported oil price on Turkey’s external balances, output gap is used as a control variable in the model. Early results through impulse response functions (IRFs) and variance decomposition indicated that the net effect of oil price fluctuations on external balances exist in the short run. Further analysis of the results and a discussion on policy implications will be added shortly.


Keywords


Oil price; external balances; VAR; Turkey

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