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Handbook of Energy and Environment Policy

Edited By Celil Aydin and Burak Darici

The book deals with the broad perspectives on the energy and environment topics and questions the traditional view on energy and environment policy and issues. Nowadays, energy and environmental issues can be accepted as the related subjects by the whole world. The link between energy and environment is backed to the time when only nature's primary resources were used. Primitive societies’ energy demand was small compared to the forces of the environment. With the emergence of industrial nations, the importance of energy and environment relation appeared again.

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8 Dynamics of Crude Oil Import Demand of Turkish Economy

Extract

S. Hilmi Kal

8   Dynamics of Crude Oil Import Demand of Turkish Economy

Introduction

One of the important characteristics of crude oil market for the period between 2001 and 2017 is high price volatility. Volatility of the crude oil price during this period is 31 US dollar and coefficient of variation during the same period is 47 percent. Since WWII, this is the close second most volatile period after the period of 1970 and 1980, during which “oil crises of 1973” and pursuing “balance of payments crises” occurred (Fig. 8.1). Volatility helps to understand short-run commodity market dynamics (Pyndick, 2004). A good understanding the crude oil import demand behavior during this high volatility period is essential for both oil exporting and oil importing countries specifically. Estimating short and long term crude oil import demand elasticities only may not provide all the information from policy making perspective. Knowledge of time profiles of the elasticities enables to understand the temporary and permanent nature of their effects which can be instrumental from a policy perspective. In this paper, we attempt to devise a frame work in two steps; in the first step, we estimate short term and long term income and relevant price elasticities of crude oil import demand and then in the second step, we analyze the time profiles of elasticities for the Turkish economy between the years between 2001 and 2017 during which oil markets have been quite volatile. The findings indicate some important policy...

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