CAUSALITY ANALYSIS BETWEEN EXCHANGE RATES AND CONSUMER PRICES OF PATATO IN TURKEY

As long as inputs used in the production of agricultural products are significantly provided by importation, changes in exchange rate have a direct impact on the cost of many products, therefore on the prices of product. In this context, as a result of the relationship between the raw material used in the production of such products and inflation, changes in the exchange rate have a direct influence on product prices. Potato is one of the major agricultural production among tuber plants in Turkey and it is cultivated extensively in the region called TR71, where includes Kırıkkale, Aksaray, Niğde, Nevşehir and Kırşehir provinces. In 2017, 142.851 hectares were harvested for potato farming and produced 4.8 million tons. In recent years, significant changes have been occurred on exchange rate in Turkey and factors affecting the prices of agricultural products became necessary. In this study, causality relations between real exchange rate and consumer price of potato by using monthly time series in Turkey was examined. The dynamic relationship between the real exchange rates and the potato prices was examined with the assumption that the variability in the potato price was due to the external exchange rate. In order to analysis this relationship, Granger causality analysis was used. The data used in the study covers the period of 2003: 01-2019: 07. The real effective exchange rate used data was obtained from the Central Bank of the Republic of Turkey (TCMB) and potato consumer prices were obtained from Turkish Statistic Institute (TurkStat). According to the results, there is no causality between real exchange rate and potato consumer prices.

Keywords

Agricultural Commodity Prices, Exchange Rates, Potato Prices, Causality, Turkey