The Effect of Oil Prices on Economic Growth, Inflation and Stock Market: An Application on Turkey Economy

Abstract

With the developing technology, use of energy and especially consumption of oil are increasing in industrialized countries. Oil use is very important for the growth of economies and development of countries. Changes in oil prices affect country economies deeply. An increase in oil prices, especially for an oil importer country, is considered as a negative indicator of that country's external balance. Thus, Turkey's economy which oil importer is also affected by changes in oil prices. In recent years, sharp increases and decreases in oil prices have attracted the attention of policy makers and macroeconomists and many researches have been made on the macroeconomic impact of oil prices. In this study, it has examined the relationship between economic growth, consumer price index, producer price index, BIST100 index and industrial firms' stocks with oil price using quarterly data for the period 2014Q1-2019Q4 in Turkey. Granger causality analysis was used in the model part of the study. As a result of the study, one-way relation was found from oil prices to economic growth, consumer price index, producer price index and industrial firms' stocks. In addition, a one-way relationship was found from BIST100 index to oil prices.