Elasticities of Turkish Exports and Imports
AbstractThe Turkish current account has been exploding in the last few years leading to concerns of a crisis. One of the primary factors identified in the rising deficits is the appreciating lira. In addition, income elasticity of exports and imports can also shed light on continuing trade deficits. In this paper we analyze exchange rate and income elasticity of Turkish imports and exports. We find a significant gap between domestic and foreign income elasticities (for exports and imports respectively) which points to a threat of growing trade deficits. In addition we also find that the exchange rate elasticity is negative for both Turkish exports and imports. This indicates that depreciation of the Turkish lira will have a negative effect on both imports and exports.
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Bibliographic InfoPaper provided by Izmir University of Economics in its series Working Papers with number 0906.
Length: 20 pages
Date of creation: Nov 2009
Date of revision:
Cointegration; current account deficits; exchange rate and income elasticity; Turkey;
Find related papers by JEL classification:
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-02-27 (All new papers)
- NEP-ARA-2010-02-27 (MENA - Middle East & North Africa)
- NEP-CWA-2010-02-27 (Central & Western Asia)
- NEP-INT-2010-02-27 (International Trade)
- NEP-OPM-2010-02-27 (Open Economy Macroeconomics)
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