THE EFFECT OF FOREIGN TRADE ON THE REAL EXCHANGE RATE: ON A LONG TERM CAUSALITY ANALYSIS OF TURKEY

Tufan Sarıtaş and Yuksel Okşak
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Tufan Sarıtaş: KARAMANOGLU MEHMETBEY UNIVERSITY
Yuksel Okşak: BURSA ULUDAĞ UNIVERSITESI, İNEGÖL İŞLETME FAKuLTESİ

Ekonomi Maliye Isletme Dergisi, 2020, vol. 3, issue 1, 55-65

Abstract: In this study, using quarterly data of 2010:1-2020:1 period, the impact of foreign trade on exchange rate in Turkey was investigated by the ARDL boundary test approach. A model has been established in which the KUR series representing the exchange rate is the dependent variable, the ITH series representing imports and the IHR series representing exports are independent variables. In long term relationships, the IHR series positively affects the KUR series with its 2.4108 coefficient. In addition, the statistical significance of the Prob. value for this series at 1% significance level confirms the presence of this positive effect. In other words, the export represented by the IHR series has a positive effect on the exchange rate represented by the KUR series and the increase in exports causes an increase in the exchange rate. It is seen that the ITH series negatively affects the KUR series with the coefficient of - 1.4314. The fact that the coefficient for this series is statistically significant at the level of 5% significance confirms this negative relationship. More clearly, imports represented by the ITH series have a negative and statistically significant effect on the exchange rate represented by the KUR series. In other words, the increase in imports reduces the exchange rate.

Keywords: Exchange Rate; Export; Import; ARDL Bound Test (search for similar items in EconPapers)
JEL-codes: E00 F10 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:gnx:emid43:2020-3-1-734612

DOI: 10.46737/emid.734612

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