The Fragility of Turkish Economy from the Perspective of Oil Dependency

• Main Authors: Eren Yildiz, Merve Karacaer Ulusoy
• Format: Article
• Language: English
• Published: University of Primorska 2015-09-01
• Series: Managing Global Transitions
• Subjects: oil price shocks; oil dependency; Turkey; macroeconomy; vector auto regressive model; gross fixed capital formation; inflation; interest rate
• Online Access: http://www.fm-kp.si/zalozba/ISSN/1581-6311/13_253-266.pdf

In an emerging economy, energy is a crucial input. Turkey as an oil dependent country, the volatility of oil price might affect more than thought. In this study, the impact of oil price changes in Turkish macroeconomy has been examined. A VAR model is built by using quarterly data from the first quarter of 2003 to the first quarter of 2013. Variables used in the model are Brent oil price, gross fixed capital formation, interest rate, us GDP and inflation. We believe that the analysis has demonstrated the fragility of Turkish economy to oil price volatility with its significant results in the relationship between oil price and main macroeconomic indicators. This study also shows the incredible need of sustainable energy policies to make a country’s economy stable.