Aggregate Imports and Expenditure Components in Turkey: Theoretical and Empirical Assessment
AbstractAfter the economic turmoil in 2001, the Turkish economy quickly recovered, and exhibited distinguished economic performance in successive years without any interruption. This success can be considered as a product of favourable international economic conditions, sound macroeconomic reforms, the beginning of the accession talks with the EU and political stability with a single party government. All these favourable conditions have allowed the Turkish economy to not have experienced any financial restraints in financing this distinguished economic performance. While increased expenditure, particularly in consumption and investment, together with high foreign demand for Turkish production, appear to have played an important role in these growth rates, the economy has begun to experience a large surge in imports and current account deficits in response to an increase in domestic expenditure. The purpose of this paper is to examine the role of macroeconomic components of aggregate expenditure in determining import demand in Turkey. Along with the empirical assessment, the paper also suggests a theoretical model of import demand, which is built upon a utility maximization of a country subject to budget constraints. The empirical model derived as a dynamic form of linear expenditure system was estimated with quarterly data from the Turkish economy for the period of 1987-2006. The results show that consumption and expenditure are two important demand components in determining imports in the long run whereas only the growth rates of consumption and investment are dominant factors in the short run. Public expenditure appeared to have no significant impact on import demand in Turkey.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 9622.
Date of creation: 01 Feb 2008
Date of revision:
Aggregate Imports; Linear Expenditure System; Turkey; Error-Correction Model;
Find related papers by JEL classification:
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O24 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-07-30 (All new papers)
- NEP-CWA-2008-07-30 (Central & Western Asia)
- NEP-INT-2008-07-30 (International Trade)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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