The relative effects of crude oil price and exchange rate on petroleum product prices: Evidence from a set of Northern Mediterranean countries


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BERUMENT M. H. , Sahin A., Sahin S.

ECONOMIC MODELLING, vol.42, pp.243-249, 2014 (Journal Indexed in SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 42
  • Publication Date: 2014
  • Doi Number: 10.1016/j.econmod.2014.07.019
  • Title of Journal : ECONOMIC MODELLING
  • Page Numbers: pp.243-249

Abstract

This paper provides a set of empirical evidence from five Northern Mediterranean countries that are subject to similar refinery reference prices regarding the relative sensitivity of crude oil prices and exchange rate on (pre-tax) petroleum product prices. The empirical evidence reveals that a one percent increase in exchange rate (depreciation) increases petroleum product prices less than a one percent increase in crude oil prices does in the long run. In the short run, however, a one percent increase in exchange rate increases petroleum product prices more than a one percent increase in crude oil prices does. (C) 2014 Elsevier B.V. All rights reserved.