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Studies on Balkan and Near Eastern Social Sciences – Volume 3

Edited By Rasim Yilmaz and Günther Löschnigg

The third volume of «Studies on Balkan and Near Eastern Social Sciences» is a collection of empirical and theoretical research papers in the social sciences regarding the Balkans and the Near East written by researchers from several different universities and institutions. The book addresses economic, financial, political, sociological, international relations, health, cultural, and feminist issues in the region of the Balkan and Near East. The book is aimed at educators, researchers, and students interested in the Balkan and Near Eastern countries.

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Oil Prices and Monetary Policy: The Case of Turkey

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Introduction

Oil and petroleum products have gained increasing importance in the real economy since they started to be used as industrial inputs. This was especially evident for countries after the 1973 oil crisis. In the scientific researches, mostly the relations between the macroeconomic variables and oil prices have been examined.

Excessive increase in the oil prices in the 1970s stimulated a series of empirical studies on the effects of oil prices. Krugman (1983), Golub (1983), and McGuirk (1983) argue that oil prices are one of the potential causes of exchange rate movements. There are many studies on cointegration between oil prices and exchange rates (Amano and Van Norden, 1998; Benassy-Quere et al., 2007; Chen and Chen, 2007; Narayan and Narayan, 2010; Benhmad, 2012; Chang, et al., 2013; Tiwari et al., 2013; Brahmasrene et al., 2014; Alom, 2015; Bal and Rath, 2015; Tiwari and Albulescu, 2016). Empirical studies also point out that the internal and external shocks such as supply shocks, demand shocks, and price shocks in the oil market have an effect on oil prices and exchange rate (Basher et al., 2012; Ju et al., 2014; Chen et al., 2016; Pershin et al., 2016; Hou et al., 2016; Volkov and Yuhn, 2016). One of the pioneer studies on the relationship between oil price and inflation is the study of Darby (1982), which suggests that the 1973 oil crisis has affected the world inflation. Subsequent studies on the subject (Burbidge and Harrison, 1984; Gisser and...

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