The Effects of Oil Price Fluctuations on Foreign Trade Performance: Evidence from Turkey as an Emerging National Economy

Nowadays, while globalization has become a prominent phenomenon and gained great importance, foreign trade has started playing a critical role for economic success of countries with the extinction of closed economy concept and shrinking distances among countries as a result of the technological advancements and fascinating continuous growth of the national economies. Many academicians and practitioners agree that the sudden and considerable oil price fluctuations recently experienced led to substantial effects on economies, especially the emerging economies through affecting their foreign trade performance negatively, or positively. Therefore, this paper is aimed at arguing and researching such effects by using the relevant data from Turkey as an emerging economy via some econometric analyses focusing on the investigation of the effects of changes in oil price on export volume and its volatility. For this purpose, several cointegration and volatility modeling studies have been carried out in which oil price, export volume and some other control variables that are assumed to possibly affect export volume are the major variables considered, using the monthly data scanning the period between January 1998 and September 2015. The empirical results provide some robust evidence about the presence of significant relationship and interaction between oil prices and export performance.

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