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An Analysis on the Domestic Sales and Exports: A Dynamic Model for the Turkish Manufacturing Firms

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  • Selcuk Gul

Abstract

This study examines the relation between real domestic sales and real exports for Turkish manufacturing firms. Dynamic panel data estimations based on firm level data for the period 2004 to 2014 suggest that the two variables are substitutes. Holding other factors constant, we estimate that a 10 percent decline in real domestic sales increases the real exports by about 2.6 percent, on average. However, this correlation differs among manufacturing sub-sectors, which are defined according to 2-digit NACE classification. Results indicate that substitutability between domestic and foreign sales is stronger for export-oriented, low-leveraged and younger firms. In addition, we observe that the degree of substitution between real domestic sales and exports strengthens significantly when the domestic demand conditions are weak. This shows that exporter firms in manufacturing industry have the elasticity to shift from domestic to international markets as a response to domestic demand shocks.

Suggested Citation

  • Selcuk Gul, 2019. "An Analysis on the Domestic Sales and Exports: A Dynamic Model for the Turkish Manufacturing Firms," Working Papers 1902, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:1902
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2019/19-02
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    Cited by:

    1. Karsten Staehr, 2021. "Export performance and capacity pressures in Central and Eastern Europe," International Economics, CEPII research center, issue 165, pages 204-217.

    More about this item

    Keywords

    Domestic sales; Exports; Domestic demand; Dynamic panel data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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