Structural Change in Turkish External Trade: Evidence from BEC Sectors

Erdal Ozmen () and Duygu Yolcu-Karadam ()
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Duygu Yolcu-Karadam: Department of Economics, METU

No 1413, ERC Working Papers from ERC - Economic Research Center, Middle East Technical University

Abstract: This study investigates export and import dynamics of Turkey in the context of the main Broad Economic Classification (BEC) sectors. Our results suggest that the trade equations do not remain stable when an endogenously estimated regime change is taken account. According to our results, consistent with the elasticity pessimism literature, real exchange rate elasticities of exports and imports are considerably low in absolute value. Exports and imports are basically determined by world real output and domestic real income, respectively, with substantially high elasticities. Consistent with the fact that Turkish integration to global value chains has substantaily increased during the post-2000 period especially in intermediate and capital goods sectors, the real exchange elasticities of exports and imports decrease (in absolute value) during the recent period. Our results suggesting that the external income elasticity of exports, for all sectors, is substantially higher than the domestic income elasticity of imports support that the Houthakker and Magee findings still remains a puzzle even under case of the higher participation in the global value chains.

Keywords: current account deficits; exports; global value chains; imports; real exchange rates; trade elasticity; Turkey. (search for similar items in EconPapers)
JEL-codes: F1 F4 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2014-11, Revised 2014-11
New Economics Papers: this item is included in nep-ara, nep-cwa, nep-int and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:met:wpaper:1413

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