We investigate the relationship between oil prices and manufacturing sector of a small open economy, Turkey. We take into account exogeneity of oil prices, extreme oil-reliance and import-dependence, as well as asymmetric responses of oil product prices to world crude oil price changes. We also control for the global liquidity and domestic finance conditions, along with real exchange rate dynamics in our VAR estimations. We report that while oil price increases do not significantly affect the manufacturing sector in aggregate terms, some sub-sectors are adversely affected.
The Review of Middle East Economics and Finance (RMEEF) addresses applied original research in the fields of economics and finance pertaining to the MENA region (Middle East and North Africa), including Turkey and Iran. The journal also publishes articles that deal with the economies of neighboring countries and/or the relationship and interactions between those economies and the MENA region.