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The effect of foreign trade on economic growth: The case of Turkey

Author

Listed:
  • Erdal Tanas KARAGÖL

    (Ankara Yýldýrým Beyazýt University, Faculty of Political Sciences, Department of Economics)

  • Ýsmail KAVAZ

    (Ankara Yýldýrým Beyazýt University, Faculty of Political Sciences, Department of Economics)

Abstract

In this study, the causal relationships between export, import and economic growth in Turkey are analysed, using quarterly data from 1987 to 2017. In order to examine these relationships a number of econometric methods are applied, such as the Augmented Dickey-Fuller Unit Root Test, Johansen Cointegration Test and Granger Causality Test based on the Error Correction Model. The results show that all variables are stationary in the first difference. Furthermore, the validity of long-run relationships among variables is found by the Johansen cointegration test. Since the cointegration is observed between series, the Error Correction Model is used to determine the causality. The empirical findings from the causality test suggest that there is short-term bidirectional causality between economic growth and import in Turkey. On the other hand, according to the Error Correction Model, there is a long run unidirectional causality from economic growth to export in Turkey.

Suggested Citation

  • Erdal Tanas KARAGÖL & Ýsmail KAVAZ, 2018. "The effect of foreign trade on economic growth: The case of Turkey," Turkish Economic Review, EconSciences Journals, vol. 5(4), pages 387-401, December.
    • Handle: RePEc:cvv:journ2:v:5:y:2018:i:4:p:387-401
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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