Asymmetric effects of exchange rate changes on Turkish bilateral trade balances

Bahmani-Oskooee, Mohsen and Halicioglu, Ferda (2017) Asymmetric effects of exchange rate changes on Turkish bilateral trade balances. Economic Systems, 41 (2). pp. 279-296. ISSN 0939-3625

Full content URL: https://doi.org/10.1016/j.ecosys.2016.07.001

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Item Type:Article
Item Status:Live Archive

Abstract

Previous studies that have assessed the short-run and the long-run effects of exchange rate changes on Turkey’s trade balance with its major partners relied upon a linear adjustment process that could not find much support for favorable effects of exchange rate changes. In this paper, once we separate real appreciations from real depreciations via the partial sum concept and introduce nonlinearity into the estimation and testing procedure, we show that the effects of exchange rate changes are asymmetric. More precisely, while lira appreciation does not have any significant effects on Turkey’s bilateral trade balances, lira depreciation has significantly favorable effects on Turkey’s trade balance with its European partners (France, Germany, Italy, Portugal, and Great Britain).

Keywords:Linear ARDL, Asymmetry, Turkey, Bilateral trade balance
Subjects:N Business and Administrative studies > N100 Business studies
Divisions:Lincoln International Business School
ID Code:42769
Deposited On:23 Oct 2020 09:06

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