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An Empirical Evaluation of the Relationship between Trade Openness and External Debt: Turkish Case

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  • Ozlem Ayvaz Kizilgol

    ()
    (Department of Econometrics, Balikesir University, Faculty of Bandirma Economics and Administrative Sciences)

  • Evren Ipek

    ()
    (Department of Economics, Balikesir University, Faculty of Bandirma Economics and Administrative Sciences)

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    Abstract

    This paper aims to analyze the empirical relationship between trade openness and external debt for the Turkish economy, using quarterly time series data from the 1990:1-2012:2 periods. We utilize the bounds testing procedure to establish the cointegration relationship among variables and the ARDL analysis to detect short run and log run static effects. We support the results from the ARDL model through the application of GMM estimation, achieved with different model definitions. Empirical results indicate that increasing trade openness affects external debt positively in both the short run and long run.

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    Bibliographic Info

    Article provided by Econometric Research Association in its journal International Econometric Review.

    Volume (Year): 6 (2014)
    Issue (Month): 1 (April)
    Pages: 42-58

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    Handle: RePEc:erh:journl:v:6:y:2014:i:1:p:42-58

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    Postal: Sairler Sokak, No:32/C, Gaziosmanpasa, Ankara, Turkey
    Phone: + 90 312 447 51 95
    Fax: + 90 312 447 51 95
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    Web page: http://www.era.org.tr/
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    Related research

    Keywords: Foreign Debt; Openness; ARDL; GMM.;

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    1. Harrison, Ann, 1996. "Openness and growth: A time-series, cross-country analysis for developing countries," Journal of Development Economics, Elsevier, vol. 48(2), pages 419-447, March.
    2. Dardana Rruka, 2004. "Decoding the Effects of Trade Volume and Trade Policies on Economic Growth: A Cross-Country Investigation," International Trade 0405003, EconWPA.
    3. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    4. Jeffrey M. Wooldridge, 2001. "Applications of Generalized Method of Moments Estimation," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 87-100, Fall.
    5. Emilio Colombo, 2009. "The Politics of External Debt in Developing Countries," Working Papers 176, University of Milano-Bicocca, Department of Economics, revised Dec 2009.
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