INDUSTRIAL PRODUCTION INDEX - CRUDE OIL PRICE NEXUS: RUSSIA, KAZAKHSTAN AND AZERBAIJAN

Abstract

The study aims to examine the causality between industrial produc-tion index and crude oil price for Rus-sia, Kazakhstan and Azerbaijan by using Frequency Domain Causality Analysis. For this purpose, the monthly data of the industrial production index and Brent oil price data over the period 1993-2019 are used. The Frequency Domain Causality Analysis suggests that the uni-directional causality relationship runs from oil prices to industrial production index is valid in the medium run for Russia and Azerbaijan and in the short run for Kazakhstan. How-ever, there is no uni-directional causality linkage between oil prices and industrial production index in the long run for any of the countries. We hope to contribute to the literature by using frequency-domain cau-sality test which examines the interrelation of crude oil prices on industrial production with the periodicity in these countries. The finding of this study is expected to serve as a tool for industrial production policy.