Oil Prices and Inflation: Empirical Evidence from Turkey

The nexus between oil prices and inflation has piqued the curiosity of policymakers, business leaders, and academics alike since oil price fluctuations have an impact on the inflation rates and accordingly on the entire economy. In this paper, we tried to investigate the relationship between oil prices and inflation in Turkey during the period from 1995 to 2022, utilizing the Bounds Cointegration test. The dependent variable is Inflation, consumer prices (annual %). The independent variables are Gross national expenditure (% of GDP), Broad money growth (annual %), and Oil prices - Crude oil prices. The results of this test confirm the long-run cointegration between inflation and oil prices during the studied interval. It's imperative for policymakers to contemplate amplifying economic tenacity by expanding the avenues of national revenue and targeting self-sufficiency in energy or a diverse energy landscape.