The Macroeconomic Effects of Increase in Imported Crude Oil Prices
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Tarih
2018
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Özet
Since the Second World War (WWII), oil has become one of the most
significant sources of energy (Brini & Jemmali & Farroukh, 2016: 1).
Therefore, economists have been closely interested in the empirical
evidence that the increase in import crude oil prices may be related to
macroeconomic performance. In other words, this interest goes back to the
1970s, when import rates of oil were too high, unprecedented deterioration
in international oil markets was seen and the US had a weak
macroeconomic performance. Thus, these experiences in the 1970s played
an important role in discussing the relationship between imported crude oil
prices and macroeconomics. Then the collapse of oil prices in 1986, the
1990-1991 Gulf War, the explosion of oil prices in 2000, and the 2003
Invasion of Iraq increased the significance of this issue (Barsky & Kilian,
2004: 115).
It has been estimated that oil reserves, one of the most important raw
materials that are widely used in today's economy and which cannot be
renewed, will run out in the late 21st century (Yetkiner & Berk, 2008: 1).
Products which prominently feature oil are common in transportation,
energy production and production of chemical goods. For this reason, oil
price is one of the key prices in the international economy and is widely
used as a reference value for other energy sources (Korhonen & Ledyaeva,
2008: 5). Oil prices are among the most significant factors which affect the
economic performance of the world and individual countries since every
sector in the economy is directly or indirectly connected to oil, which is
one of the main energy sources. Therefore, the higher the price of
imported crude oil and the longer it lasts, the greater the impact on
macroeconomics. In addition, as the share of oil spending in an individual
country increase in GDP, and the country's ability to access alternative
sources of energy other than oil decreases, the negative impact of imported
crude oil prices on the economy increases.
Macroeconomists have defined changes in oil prices as a major
paradox for global shock which can be both a major source of economic
volatility and can simultaneously affect most economies (Amin et al.,
2015: 2). In this context, many researchers intensively discuss the
relationship between oil prices and macroeconomic fluctuations. As oil
prices are constantly changing, they have a significant effect on
macroeconomic variables such as inflation and output (Wang & Carlos,
2017: 2). Therefore, the effect of change in the price of imported crude oil,
which constitutes the most important source of energy for meeting rising
demand on economic indicators as a result of technological development
and population growth rate should be examined well (Abdioğlu &
Değirmenci, 2016: 331).
On the other hand, many researchers argue that the negative effects of
increases in imported crude oil prices on the economy may be stronger
than the positive effects of the decrease in oil prices on the economy (Ben
et al., 2016: 138). In this context, the relationship between the increase in
imported crude oil prices and macroeconomics has aroused the interest of
researchers and policy makers, especially in the last four decades
(Abdulkareem & Abdulhakeem, 2016: 1).
In this study, the effects of imported crude oil prices on macroeconomics
have been researched. In this direction, firstly, the definition of oil and the
characteristics of the oil market have been addressed and the
macroeconomic effects of increase in imported crude oil prices have been
discussed.
