Energy Prices-Inflation Nexus: A Historical Analysis for the Case of Ottoman Empire

In this paper, the link between energy prices and price level is investigated from a historical perspective for the case of Ottoman Empire during the period 1885-1914. Although the unit root test results revealed that none of the variables are integrated of second or higher order, the findings of the unit root tests were conflicting. Therefore, to investigate the dynamic relations between energy prices and inflation, ARDL approach to cointegration is employed. The results of the bounds tests showed that energy prices and CPI were cointegrated. Furthermore, ARDL long-run results showed that a 1% change in inflation causes a 0.85% change in energy prices in same direction.