Volume 11, Issue 4, 56-69.

The Impact of Oil, Gas and Coal Prices on the Agricultural Trade of Turkey: A Cointegration Analysis

Nezahat DOGAN*, PhD
Final International University, Department of Finance, Kyrenia, T.R. Northern Cyprus, via Mersin 10, Turkey. e-mail: nezahat.dogan@final.edu.tr.

Nuru GIRITLI, PhD
European University of Lefke, Department of Economics, Lefke, T.R. Northern Cyprus, via Mersin 10, Turkey. e-mail: ngiritli@eul.edu.tr.

ABSTRACT

The study examines the relationship between energy prices and the agricultural trade balance nexus for Turkey by using an autoregressive distributed lag (ARDL) model. The model is designed to use coal, gas, and oil prices as exogenous variables and agricultural trade balance as a determined variable. Most recent empirical studies consider the impact of the oil price on agricultural commodity prices, while only a few studies analyze the impact of other energy prices, such as coal and gas, on agricultural trade. In addition to coal, gas, and oil prices, control variables such as agricultural good price ratio, real income, and real exchange rate are added to the model, as those variables are expected to affect the trade balance of countries. The results indicate that there is a cointegration among variables, and that prices of gas and coal have a significantly negative impact on agricultural trade in Turkey for both long-run and short-run time periods. However, the price of oil has a significantly negative impact in the long run, though this is insignificant in the short run. Given that agricultural trade is affected by the changes in energy prices, this study suggests a number of policy actions that should be taken into account for improving agricultural trade in Turkey.

JEL Classifications: O13; Q17; Q4.

Keywords: Agricultural Trade; Energy; Coal; Oil; Gas.

*Corresponding author.

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