Sunk Cost Hysteresis in Turkish Manufacturing Exports

Kurmaş Akdoğan and Laura Werner

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: This article examines hysteresis in export entry-exit decisions of the Turkish manufacturing sector using the Preisach method. As the argument goes, sunk costs imply threshold levels of the exchange rate affecting the export market entry-exit behaviour of firms. The wait-and-see behaviour of firms in between these thresholds results in hysteresis in export markets at the aggregated level. Our results suggest sunk cost hysteresis for five subsectors of the Turkish manufacturing sector: clothing, textiles, machinery, tobacco products and communication equipment. The article also provides a more detailed look on the determinants of hysteresis behaviour in the clothing sector.

Keywords: Hysteresis; Exports; Preisach method; Nonlinearity; Path-dependency (search for similar items in EconPapers)
JEL-codes: C19 F14 L60 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ara, nep-com and nep-int
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:2136

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