Asymmetric cointegration with threshold adjustment model of exchange rates and the trade balance in Turkey

Dincer Dedeoglu and Kaan Ogut

The Journal of International Trade & Economic Development, 2017, vol. 26, issue 2, 174-194

Abstract: This paper aims to investigate the long-run equilibrium relationship between the trade balance and exchange rates in Turkey using the asymmetric error correction model with threshold cointegration. The results provide new evidence for the asymmetric long-run relationship between the trade balance and exchange rates. Besides, deviations from the long-run equilibrium due to a relative increase in real exchange rates have a lower speed of adjustment in comparison to the deviations caused by a relative decrease in real exchange rates.

Date: 2017
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DOI: 10.1080/09638199.2016.1233288

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