Turkish Trade in Eight Service Categories and the Role of Exchange Rate

Mohsen Bahmani-Oskooee and Ferda Halicioglu

MPRA Paper from University Library of Munich, Germany

Abstract: A new strand of literature in international economics is now in the early stages of development, i.e., the impact of exchange rate changes on service trade. We add to this literature by considering the link between the Turkish lira's real effective exchange rate and its trade in services. Since nonlinear adjustment of the exchange rate has proven to yield more significant outcomes relative to linear adjustment, we estimate a nonlinear model (assuming the effects are asymmetric) in addition to a linear model (which assumes the effects are symmetric). When we first estimated the models using Turkish aggregate trade in services, we could only find some short-run effects. However, we disaggregated the data into eight service categories to reduce aggregation bias. We then found short-run significant effects in all eight service industries. Short-run effects lasted into long-run effects in six industries. The unaffected industries were construction and transport.

Keywords: Trade in Services; Real Effective Exchange Rate; Asymmetric Analysis; Turkey (search for similar items in EconPapers)
JEL-codes: C22 F14 G20 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:125454

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