Abstract
The aim of this study is to attempt to estimate the short-run and the long-run elasticities of demand for crude oil in Turkey by the recent autoregressive distributed lag (ARDL) bounds testing approach to cointegration. As a developing country, Turkey meets its growing demand for oil principally by foreign suppliers. Thus, the study focuses on modelling the demand for imported crude oil using annual data covering the period 1980–2005. The bounds test results reveal that a long-run cointegration relationship exists between the crude oil import and the explanatory variables: nominal price and income, but not in the model that includes real price in domestic currency. The long-run parameters are estimated through a long-run static solution of the estimated ARDL model, and then the short-run dynamics are estimated by the error correction model. The estimated models pass the diagnostic tests successfully. The findings reveal that the income and price elasticities of import demand for crude oil are inelastic both in the short run and in the long run.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
