Effect of Exchange Rates and Oil Prices in Export of Agricultural Products: The Example of Turkey
Keywords:
Regional Economics, International Economics, International Trade, Agricultural Goods, Oil price and Exchange RatesAbstract
Agricultural goods are so significant export output in order to compensate trade deficit in terms of balance of payments in developing countries. In this context, the impact of oil price and exchange rates on agricultural goods have been discussed in this paper. Agricultural good is determined as dependent variable and oil price and exchange rates are determined as independent variable. Multivariate regression test is implemented in order to reveal the effect of oil price and exchange rates on agricultural goods. Data are derived from International Trade Center as monthly and they all used in econometrical analysis. Besides, Johansen co-integration test is used to comprehend long-term relationship between relevant variables. After determining that the VAR analysis is stationary, both impulse response and variance decomposition analysis are implemented to reply which independent variable influences more the dependent variable comparing other independent variable. In this work, according to all empirical results, there is long-term relationship between variables and both oil price and exchange rates affect agricultural goods. To sum up, agricultural goods are essential by providing energy resources and its strategical importance to increase competition among international markets. The production of agricultural goods are so vital via petroleum resources which increases strategic advantage of its significance. Therefore, agricultural goods exporting countries should develop supportive policy for producing agricultural goods due to lack of petroleum resources.
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