Abstract: This paper investigates how fuel price fluctuations shape inflation expectations and economic decisions across households, firms, and market participants. Using high-frequency administrative and survey data from Türkiye, we identify consistent stagflationary effects of fuel price increases. A 1% rise in fuel prices raises households’ 12-month-ahead CPI expectations by about 0.35%, with stronger effects among low-income groups (0.37%) than high-income ones (0.28%). Professional forecasters revise inflation expectations by 0.36% at the 12-month horizon, attenuating to 0.18% at five years, suggesting partial anchoring; financial-sector respondents extrapolate shocks more persistently than real-sector counterparts. For firms, CPI inflation expectations increase by 0.38% per 1% fuel price rise, with an additional 0.04% elasticity in energy-intensive industries. These belief shifts translate into real effects: firms reduce sales, purchases, and employment while expanding supplier networks. Our results underscore the salience of fuel prices—and oil more broadly—as uncertain global signals that amplify stagflationary trade-offs, complicating the stabilization of expectations in energy-importing economies.

Abstract: This paper examines the high-frequency impact of oil price shocks on firms’ inflation expectations and subsequent credit demand. Exploiting city-level variation in retail fuel pump prices within a 5-day window, we identify the immediate effect on firms’ expectations. Our findings indicate a pass-through of about 30%: a 1 percent increase in local oil prices leads to a 0.3 percentage point rise in firms’ one-year-ahead inflation expectations. Building on this, we analyze the consequent shifts in corporate credit behavior following oil supply shocks: a 1 percent increase in fuel prices leads to a 0.5 percent rise in short-term borrowing and a 0.5 percent decline in long-term borrowing, as higher operating costs increase working-capital needs while a weaker macroeconomic outlook reduces planned investment. The net effect is a maturity reallocation rather than a change in total borrowing. The results document a dual channel through which oil shocks shape firms’ beliefs and create divergent shifts in short- versus long-term corporate credit demand. 

Abstract: This paper examines the February 2023 Kahramanmara¸s earthquakes in Türkiye to study how large, spatially concentrated disasters affect firm outcomes and propagate through production networks. We assemble a novel administrative dataset covering quarterly firm performance and employment records of more than one million firms over 2020Q1–2025Q4. This data is linked to near-universe firm-to-firm VAT invoice data, allowing us to construct time-varying buyer–supplier networks. Using information on firms’ predisaster location and network exposure we estimate impacts by implementing difference-in-differences and event-study designs that exploit the exogenous nature of the earthquakes. Our results reveal that while firms outside the earthquake region are hurt through their linkages to the earthquake region, networks work as a shelter for firms located in earthquake region.First, firms in the disaster zone experience large and persistent contractions in activity and network scope: sales decline by about 21 percent, employment by 7 percent, and both supplier and customer counts by roughly 4 percent. Second, the effects are stronger for small and medium-sized enterprises and highly leveraged firms, consistent with balance-sheet constraints and limited operational slack, whereas firms with greater pre-earthquake upstream and downstream openness experience attenuated contractions. Third, duration analyses show that recovery depends critically on pre-disaster network structure: firms with greater upstream and especially downstream openness return to pre-earthquake sales levels significantly faster, even after controlling for firm characteristics. Fourth, firms with greater pre-earthquake trade exposure to the affected region experience persistent declines in sales, purchases, and trading partners, and although they partially reallocate toward non-affected partners, substitution remains incomplete.