Impact of oil prices, the U.S interest rates on Turkey’s real estate market. New evidence from combined co-integration and bootstrap ARDL tests

Ahmed Alhodiry,Ahmed Samour,Husam Rjoub,J E Trinidad Segovia

doi:10.1371/journal.pone.0242672

Ahmed Alhodiry, Ahmed Samour + Show 2 more

Open Access

https://doi.org/10.1371/journal.pone.0242672

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Journal: PloS one	Publication Date: Jan 4, 2021
Citations: 29	License type: CC BY 4.0

Affiliation: Cyprus International University, Near East University

Abstract

The research aims to provide new empirical evidence by testing the impact of the external shocks namely: oil prices and the U.S interest rate on Turkey’s real estate market by using three techniques of co-integration tests namely: the newly developed bootstrap autoregressive distributed lag (ARDL) testing approach as proposed by (McNown et al. 2018), the new approach involving the Bayer-Hanck (2013) combined co-integration test, Hatemi-J (2008) co-integration testing approach. The ARDL model is utilized to explore the relationship between the variables. The findings show that the oil prices have a positive impact on Turkey’s real estate market, the results confirm that there is a significant impact of oil prices on Turkey’s real estate market through the domestic interest rate. Furthermore, the results demonstrated that there is a significant spillover influence of the U.S. interest rates on Turkey’s real estate market through oil prices and domestic interest rates. This study suggests that the following factors led to increasing the sensitivity and volatility of the Turkish real estate market to oil prices and the U.S. interest rate fluctuations: the presence of economic interdependence between the USA and Turkey, and the majority of the external debts and the reserve currency in Turkey are composed in the USD, and Turkey’s oil imports hit record high in last years. Finally, this article suggests that policymakers in Turkey should pay close attention to the effects of external shocks namely the oil prices and U.S. interest rates on Turkish markets to maintain economic and financial stability.

Highlights

IntroductionTurkey’s integration into the world markets has increased, resulting in the globalization of the world economy
Over the past decades, Turkey’s integration into the world markets has increased, resulting in the globalization of the world economy
This study aims to test the impact of the U.S interest rates on emerging markets like Turkey, after the 2008–2009 global financial crisis (GFC)

Summary

Introduction

Turkey’s integration into the world markets has increased, resulting in the globalization of the world economy. The Turkish markets are affected by the policies of developed economies or any global external shocks such as oil prices. In this regard, the main objective of this research is to provide new empirical evidence by testing the impact of the external shocks namely: The U. S interest rate and oil prices on Turkey’s real estate market.

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