An Investigation Of Real Exchange Rate Volatility On Turkish Textile And Apparel Export
Due to significant contributions of textile and apparel industry in terms of employment, export opportunities and industrial value added, it has a crucial role in the Turkish economy. Even there are many factors influencing the export performance of this sector, real exchange rate is one of the significant factors. In this study, we investigated the causal relationship between the real exchange rate and export of textile and apparel industry by using monthly data, covering from 1998-2008. Exchange rate volatility was also considered in the model using GARCH approach. In order to determine appropriate Granger causality relations, unit root, cointegtration and error correction models were used. With time-series techniques, this study provided evidence that there is a long-run relationship exist between the real exchange rate and export of textile and apparel industry. Based on the results of the model it was concluded that increasing exchange rate volatility negatively impacts on textile and apparel export. Moreover, results indicated that there is a one way casual relationship from real exchange rate to export of textile and apparel industry, and bidirectional Granger causality from exchange rate volatility to textile and apparel industry.
Volume (Year): 10 (2010)
Issue (Month): 2 (May)
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