Asymmetric Effects of Oil Prices on the Manufacturing Sector in Turkey

We investigate the relationship between oil prices and manufacturing sector of a small open economy, Turkey. We take into account exogeneity of oil prices, extreme oil-reliance and import-dependence, as well as asymmetric responses of oil product prices to world crude oil price changes. We also cont...

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Bibliographic Details
Published in:Review of Middle East economics and finance 2010-07, Vol.6 (1), p.90-105
Main Authors: Torul, Orhan, Alper, C. Emre
Format: Article
Language:English
Subjects:
Business cycles
Derivatives
Economic activity
Economic conditions
Economies of scale
Finance
global liquidity
Liquidity
Macroeconomics
Manufacturing
Oil price
Open economies
Output rate
petroleum derivative price
Petroleum industry
Prices
Production level
Regression analysis
small open economy
Turkey
Vector-autoregressive models
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Summary:We investigate the relationship between oil prices and manufacturing sector of a small open economy, Turkey. We take into account exogeneity of oil prices, extreme oil-reliance and import-dependence, as well as asymmetric responses of oil product prices to world crude oil price changes. We also control for the global liquidity and domestic finance conditions, along with real exchange rate dynamics in our VAR estimations. We report that while oil price increases do not significantly affect the manufacturing sector in aggregate terms, some sub-sectors are adversely affected.
ISSN:1475-3693
1475-3685
1475-3693
DOI:10.2202/1475-3693.1269