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Price and Income Elasticities of Turkish Export Demand : A Panel Data Application

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  • Evren Erdogan Cosar

Abstract

In this paper, price and income elasticities of export demand are calculated. The study is extended to sectoral and country specific export demand functions. The paper presents some panel unit root and cointegration tests, which have been studied extensively in recent years. The major aim of this study is to find the price and foreign income elasticities of aggregate export demand. According to the estimation results, the real exchange rate elasticity of total export demand is found to be less than one, whereas the income elasticity is found to be greater than one.

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File URL: http://www.tcmb.gov.tr/research/cbreview/july02-2.pdf
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Bibliographic Info

Article provided by Research and Monetary Policy Department, Central Bank of the Republic of Turkey in its journal Central Bank Review.

Volume (Year): 2 (2002)
Issue (Month): 2 ()
Pages: 19-53

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Handle: RePEc:tcb:cebare:v:2:y:2002:i:2:p:19-53

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Related research

Keywords: Panel Unit Root Test; Panel Cointegration Test; Income and Real Exchange Rate Elasticities;

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References

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  1. Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
  2. Suzanne McCoskey & Chihwa Kao, 1998. "A residual-based test of the null of cointegration in panel data," Econometric Reviews, Taylor & Francis Journals, vol. 17(1), pages 57-84.
  3. Kao, Chihwa, 1999. "Spurious regression and residual-based tests for cointegration in panel data," Journal of Econometrics, Elsevier, vol. 90(1), pages 1-44, May.
  4. Coiteux, Martin & Olivier, Simon, 2000. "The saving retention coefficient in the long run and in the short run: evidence from panel data," Journal of International Money and Finance, Elsevier, vol. 19(4), pages 535-548, August.
  5. Quah, Danny, 1994. "Exploiting cross-section variation for unit root inference in dynamic data," Economics Letters, Elsevier, vol. 44(1-2), pages 9-19.
  6. Coakley, Jerry & Fuertes, Ana Maria, 1997. "New panel unit root tests of PPP," Economics Letters, Elsevier, vol. 57(1), pages 17-22, November.
  7. Goldstein, Morris & Khan, Mohsin S., 1985. "Income and price effects in foreign trade," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 20, pages 1041-1105 Elsevier.
  8. Banerjee, Anindya, 1999. " Panel Data Unit Roots and Cointegration: An Overview," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 607-29, Special I.
  9. Abdelhak S. Senhadji & Claudio E. Montenegro, 1999. "Time Series Analysis of Export Demand Equations: A Cross-Country Analysis," IMF Staff Papers, Palgrave Macmillan, vol. 46(3), pages 2.
  10. Fleissig, Adrian R. & Strauss, Jack, 1997. "Unit root tests on real wage panel data for the G7," Economics Letters, Elsevier, vol. 56(2), pages 149-155, October.
  11. Peter C.B. Phillips & Hyungsik R. Moon, 1999. "Linear Regression Limit Theory for Nonstationary Panel Data," Cowles Foundation Discussion Papers 1222, Cowles Foundation for Research in Economics, Yale University.
  12. Canzoneri, Matthew B. & Cumby, Robert E. & Diba, Behzad, 1999. "Relative labor productivity and the real exchange rate in the long run: evidence for a panel of OECD countries," Journal of International Economics, Elsevier, vol. 47(2), pages 245-266, April.
  13. Engle, Robert F. & Yoo, Byung Sam, 1987. "Forecasting and testing in co-integrated systems," Journal of Econometrics, Elsevier, vol. 35(1), pages 143-159, May.
  14. Denis Kwiatkowski & Peter C.B. Phillips & Peter Schmidt, 1991. "Testing the Null Hypothesis of Stationarity Against the Alternative of a Unit Root: How Sure Are We That Economic Time Series Have a Unit Root?," Cowles Foundation Discussion Papers 979, Cowles Foundation for Research in Economics, Yale University.
  15. Chihwa Kao & Min-Hsien Chiang, 1997. "On the Estimation and Inference of a Cointegrated Regression in Panel Data," Econometrics 9703001, EconWPA.
  16. Arslan, Ismail & van Wijnbergen, Sweder, 1993. "Export Incentives, Exchange Rate Policy and Export Growth in Turkey," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 128-33, February.
  17. Wu, Jyh-Lin, 2000. "Mean reversion of the current account: evidence from the panel data unit-root test," Economics Letters, Elsevier, vol. 66(2), pages 215-222, February.
  18. Strauss, Jack, 2000. "Is there a permanent component in US real GDP," Economics Letters, Elsevier, vol. 66(2), pages 137-142, February.
  19. Leybourne, S J & McCabe, B P M, 1994. "A Consistent Test for a Unit Root," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(2), pages 157-66, April.
  20. Menzie David Chinn, 1997. "Sectoral Productivity, Government Spending and Real Exchange Rates: Empirical Evidence for OECD Countries," NBER Working Papers 6017, National Bureau of Economic Research, Inc.
  21. Bahmani-Oskooee, Mohsen & Ltaifa, Nabil, 1992. "Effects of exchange rate risk on exports: crosscountry analysis," World Development, Elsevier, vol. 20(8), pages 1173-1181, August.
  22. Jose Campa & Linda S. Goldberg, 1996. "Investment, pass-through, and exchange rates: a cross-country comparison," Staff Reports 14, Federal Reserve Bank of New York.
  23. Shin, Yongcheol, 1994. "A Residual-Based Test of the Null of Cointegration Against the Alternative of No Cointegration," Econometric Theory, Cambridge University Press, vol. 10(01), pages 91-115, March.
  24. Driver, R. & Wren-Lewis, S., 1999. "New Trade Theory and Aggregate Export Equations: an Application of Panel Cointegration," Discussion Papers 9917, Exeter University, Department of Economics.
  25. Sanjaya Lall, . "Turkish Performance in Exporting Manufactures: A Comparative Structural Analysis," QEH Working Papers qehwps47, Queen Elizabeth House, University of Oxford.
  26. Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I.
  27. repec:cup:etheor:v:10:y:1994:i:1:p:95-115 is not listed on IDEAS
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Citations

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Cited by:
  1. M. Zakir Saadullah Khan, 2012. "Examining Friedman Hypothesis On Political,Civil And Economic Freedom For Saarc Countries: A Dynamic Panel Data Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 37(3), pages 107-127, September.
  2. Donatella Baiardi & Carluccio Bianchi & Eleonora Lorenzini, 2013. "The Clothing Export Performance and Prospects for Advanced and Emerging Economies: Evidence from a Panel Data Analysis," DEM Working Papers Series 038, University of Pavia, Department of Economics and Management.
  3. Aysan, Ahmet Faruk & Hacihasanoglu, Yavuz Selim, 2007. "Investigation on the Determinants of Turkish Export-Boom in 2000s," MPRA Paper 5493, University Library of Munich, Germany.
  4. Utku Utkulu & Dilek Seymen, 2004. "Trade and Competitiveness Between Turkey and the EU: Time Series Evidence," Working Papers 2004/8, Turkish Economic Association, revised Mar 2004.

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