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Asymmetric effects of exchange rate changes on Turkish bilateral trade balances

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  • Bahmani-Oskooee, Mohsen
  • Halicioglu, Ferda

Abstract

Previous studies that have assessed the short-run and the long-run effects of exchange rate changes on Turkey’s trade balance with its major partners relied upon a linear adjustment process that could not find much support for favorable effects of exchange rate changes. In this paper, once we separate real appreciations from real depreciations via the partial sum concept and introduce nonlinearity into the estimation and testing procedure, we show that the effects of exchange rate changes are asymmetric. More precisely, while lira appreciation does not have any significant effects on Turkey’s bilateral trade balances, lira depreciation has significantly favorable effects on Turkey’s trade balance with its European partners (France, Germany, Italy, Portugal, and Great Britain).

Suggested Citation

  • Bahmani-Oskooee, Mohsen & Halicioglu, Ferda, 2017. "Asymmetric effects of exchange rate changes on Turkish bilateral trade balances," Economic Systems, Elsevier, vol. 41(2), pages 279-296.
  • Handle: RePEc:eee:ecosys:v:41:y:2017:i:2:p:279-296
    DOI: 10.1016/j.ecosys.2016.07.001
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    References listed on IDEAS

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    Cited by:

    1. Afees A. Salisu & Umar B. Ndako, 2017. "Modelling stock price-exchange rate nexus in OECD countries - A new perspective," Working Papers 038, Centre for Econometric and Allied Research, University of Ibadan.

    More about this item

    Keywords

    Linear ARDL; Nonlinear ARDL; Asymmetry; Turkey; Bilateral trade balance;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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