Asymmetric Relationships Between Natural Gas Price Inflation and Macroeconomic Factors: The Case of Turkey

Abstract

Energy inflation is one of the main factors affecting macroeconomic indicators. The price inflation of natural gas, which is the basic input of electricity generation, housing, industry and service sectors and causes less CO2 emissions than other fossil fuel energy types, is the focus of this study. Natural gas, like other fossil fuels, is a scarce energy source and is not evenly distributed around the world. For this reason, some countries export natural gas, while others import natural gas. Countries that are foreign-dependent in natural gas are affected by the political, geographical and economic conjuncture of the countries they import from. In this context, Turkey was affected by Russia-Ukraine war and natural gas prices increased accordingly. The study aims to determine the asymmetric relationships between natural gas price inflation and macroeconomic factors in Turkey. For this purpose, autoregressive distributed lag (ARDL) and nonlinear autoregressive distributed lag (NARDL) models were used for Turkey's 1998Q1-2023Q2 data. As a result of the analysis, it was determined that there was an asymmetric relationship between natural gas inflation and producer price index, gross domestic product, balance of payments. The results obtained showed the importance of natural gas found in the Black Sea and natural gas pipelines passing through Turkey (TANAP etc.), and an ecopolitical evaluation was made in this context.