Oil prices and current account: A structural analysis for the Turkish economy

Özlale, Ümit; Pekkurnaz, Didem

doi:10.1016/j.enpol.2010.03.082

Cited by 72 publications

(36 citation statements)

References 21 publications

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“…However, because current account dynamics is not only affected by oil prices, we identify and include other variables that are likely to influence the current account balances. Particularly, to construct a structural relationship between oil prices and current account balances, it is necessary to control for other determinants of the current account such as openness, economic growth, ERM and excess aggregate demand (output gap) (see Ozlale and Pekkurnaz, 2010).…”

Section: Methodsmentioning

confidence: 99%

“…In a pivotal paper to our work, Ozlale and Pekkurnaz (2010) carried out a structural analysis of the relationship between oil prices and the current account in the Turkish economy. They employed a SVAR model with six restrictions and found that unexpected increases in oil prices will cause the CAR to fall, implying that there is no one‐for‐one effect of oil prices on current account balances—a finding that underscores the importance of international financial integration in mitigating the negative impacts of oil price shocks on external balances.…”

Section: Oil Price Shocks and Current Account Dynamicsmentioning

confidence: 99%

“…A few other studies that try to consider developing countries (e.g. Zaouali, 2007 and Ozlale and Pekkurnaz, 2010) focus on oil‐importing developing economies. To the best of our knowledge, there is not a single literature that investigates the oil price–current account relation for an oil‐exporting developing economy like Nigeria.…”

Section: Introductionmentioning

confidence: 99%

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Oil price shocks and the dynamics of current account balances in Nigeria

Chuku¹,

Akpan²,

Sam³

et al. 2011

OPEC Energy Review

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This paper pioneers research on the relationship between oil price shocks and current account dynamics in Nigeria, a country that doubles as an oil exporter and importer. Structural vector autoregression is applied to quarterly data from 1970Q1 to 2008Q4 to identify oil price shocks and to evaluate its net effect on Nigeria's current account balances. After introducing three control variables (output gap, real exchange rate misalignment and the lagged values of current account ratio), we impose six structural restrictions on the model to help track and identify the structural shocks of oil prices on current account balances. Overall, we find that oil price shocks have a significant short‐run effect on current account balances for Nigeria. Specifically, the impulse response of the current account ratio to oil price shocks increases speedily in the first six quarters, and then, it declines afterwards until the 30th quarter. The variance decomposition analysis shows that approximately 15.77 per cent of the variations in current account dynamics are caused by oil price shocks. The insight we draw from this finding is that there is no one‐for‐one relation between oil price shocks and current account dynamics. Exchange rate misalignment provides the offsetting effect as revealed from our results. The implication for policy is that reserve‐augmenting strategies, lax monetary policy and intensified international financial integration would need to be enhanced and sustained by policy‐makers to reinforce the positive effects of oil price shocks on the Nigerian economy.

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Section: Methodsmentioning

confidence: 99%

Section: Oil Price Shocks and Current Account Dynamicsmentioning

confidence: 99%

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Oil price shocks and the dynamics of current account balances in Nigeria

Chuku¹,

Akpan²,

Sam³

et al. 2011

OPEC Energy Review

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“…Their empirical data reveal that oil price has a negative and significant effect on economic growth and the unidirectional causality exists running from oil price to economic growth. Ozlale and Pekkurnaz (2010) analyzed the linkages between oil price and macroeconomic variables for the Turkish economy. They applied a structural vector autoregression model (SVAR) and confirmed that oil price leadsto a current account deficit that leads to a decline in economic growth.…”

Section: Oil Price and Economic Growthmentioning

confidence: 99%

Dynamics of electricity consumption, oil price and economic growth: Global perspective

et al. 2017

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Abstract:This study uses the data from 157 countries from 1960 to 2014 to analyze the relationship between economic growth, electricity consumption, oil prices, capital, and labor. The economic growth of developing countries with industrial infrastructure has a more significant association with electricity consumption than oil prices. We use oil prices and electricity consumption jointly to study highly predictive observations for economic growth. The data are categorized by income, OECD and regional levels. The panel cointegration, long-run parameter estimation, and Pool Mean Group testsare used to analyze the cointegration and short-run and long-run relationships between the variables. The empirical results indicate the presence of cointegration between the variables. The presence of feedback effects between electricity consumption and economic growth, oil prices and economic growth is valid. These findings confirm that inspite of the oil prices, developing countries rely heavily on electricity consumption for economic growth. In the short run, growth and feedback effects suggest that more vigorous electricity policies should be implemented to attain sustainable economic growth for the long-term.

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“…Most of the research on the CAD of Turkey emphasizes on the trade deficit and structural characteristics of Turkish economy to explain it (Ozata, 2014;Kayikci, 2012;Ozlale and Pekkurnaz, 2010). Oil dependency, imports of intermediate goods in manufacturing and a low value added can be among these characteristics.…”

Section: Overview Of the External Imbalances: Current And Capital Accmentioning

confidence: 99%

Dollarization and External Sustainability of Turkey

Karimova¹,

Caliskan²,

Karimov³

2015

EJEF

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In this paper, we attempt to explain that expanding current account deficit of Turkey can be a highlighting signal of its dependency on foreign capital inflows. When private non-financial firms borrow in foreign currency, they face currency mismatch in their balance sheets. Statistical analyses of aggregated balance sheet data of non-financial sector revealed that the negative gap between firms' dollarized assets and liabilities has been increasing considerably in Turkey. This creates financial exposure by private non-financial sector. Given a high level of liability dollarization by firms in Turkish economy, it is exposed dramatically to the changes in external and domestic conditions.

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Oil prices and current account: A structural analysis for the Turkish economy

Cited by 72 publications

References 21 publications

Oil price shocks and the dynamics of current account balances in Nigeria

Oil price shocks and the dynamics of current account balances in Nigeria

Dynamics of electricity consumption, oil price and economic growth: Global perspective

Dollarization and External Sustainability of Turkey

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