Relationship between Real Oil Price and Real Exchange Rate: the case of Turkey

Abstract

For developing countries like Turkey which lack of sufficient amount of oil and energy resources, real exchange rate and real oil prices are important for sustainable economic growth rate. The academic accounts focusing on the fluctuation in both factors in the oil exporting and developed countries also show that real oil prices are influential in determining the real exchange rates. There are only a few works on the developing countries. In the non-oil exporting-developing countries, real oil price is affected by the fluctuations in the real exchange rate which require changes to the macro-economic policies. This paper investigates the long-run relationship between real oil prices and real exchange rates by using a monthly data from 02:2001 to 07:2011. In the work, cointegration with structural breaks tests by Perron veKejriwal (2009) are used.