Is There Any Asymmetry Between Fuel and Crude Oil Prices in Turkey?

Abstract

This article examines the relationship between crude oil and fuel prices in Turkey covering the period January 1987 and October 2013. Regime-dependent responses and variance decompositions derived from the TVAR models confirm the asymmetry in the price adjustment process: Diesel and gasoline prices respond more aggressively to oil price increases than to decreases. The results further indicate that exchange rate movements are more important than the change in crude oil prices in the explanation of asymmetric price transmission mechanism.