This study examines the dynamic relationship between oil prices and exchange rates, concentrating on the effects of various exchange rate regimes on this relationship. Previous research on the relationship between oil prices and exchange rates has been extensive; however, the effects of different exchange rate regimes have not been properly investigated. For instance, we utilize econometric techniques like Vector Autoregression (VAR) analysis, Augmented Dickey-Fuller (ADF), and Phillips-Perron (PP) unit root tests on Turkey that are highly reliant on the price of Brent crude oil. The findings indicate that exchange rate regimes have a significant impact on the long-term correlations between oil prices and exchange rates, as well as the volatility of these correlations. The analysis highlights how important it is for emerging nations' fiscal and monetary policymakers to consider these dynamics. Policymakers will benefit from a greater knowledge of these links as a result of this work, which will assist lessen the economic instability caused by fluctuations in oil prices. Additionally, the results imply that, in comparison to fixed regimes, flexible exchange rate regimes may provide greater resilience against shocks to the price of oil. This knowledge is especially helpful for developing nations looking to create more resilient economic strategies.
It is declared that scientific and ethical principles have been followed while carrying out and writing this study and that all the sources used have been properly cited.
This research received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors.
This study examines the dynamic relationship between oil prices and exchange rates, concentrating on the effects of various exchange rate regimes on this relationship. Previous research on the relationship between oil prices and exchange rates has been extensive; however, the effects of different exchange rate regimes have not been properly investigated. For instance, we utilize econometric techniques like Vector Autoregression (VAR) analysis, Augmented Dickey-Fuller (ADF), and Phillips-Perron (PP) unit root tests on Turkey that are highly reliant on the price of Brent crude oil. The findings indicate that exchange rate regimes have a significant impact on the long-term correlations between oil prices and exchange rates, as well as the volatility of these correlations. The analysis highlights how important it is for emerging nations' fiscal and monetary policymakers to consider these dynamics. Policymakers will benefit from a greater knowledge of these links as a result of this work, which will assist lessen the economic instability caused by fluctuations in oil prices. Additionally, the results imply that, in comparison to fixed regimes, flexible exchange rate regimes may provide greater resilience against shocks to the price of oil. This knowledge is especially helpful for developing nations looking to create more resilient economic strategies.
Primary Language | English |
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Subjects | Growth, Development Economics - Macro |
Journal Section | Articles |
Authors | |
Publication Date | July 15, 2024 |
Submission Date | June 2, 2024 |
Acceptance Date | July 5, 2024 |
Published in Issue | Year 2024 |
International Journal of Economics, Politics, Humanities & Social Sciences – IJEPHSS Creative Commons Atıf-GayriTicari 4.0 Uluslararası Lisansı (CC BY NC) ile lisanslanmıştır.