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Exchange Rate Pass-Through and Exposure in the Turkish Economy

Author

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  • Nazli Toraganli

Abstract

This paper examines the impact of exchange rate variations on the export prices and the profitability of the firms, at sectoral and at firm level respectively, in the Turkish manufacturing industry for the period 1995-2007. The data set consists of export unit values, bilateral exchange rates, total revenues, cost of goods sold, value of domestic and foreign sales, and Turkey's export trade partner's GDP's and CPI's. The results show that there is a tendency for local currency price stabilization. The average estimate of exchange rate passthrough to export prices is around 0.6. There is a mixed evidence on the relationship between exchange rate variations and profitability. It is found an apparent variation in the magnitude and direction of exposure across firms. However, these results are not robust to the specification used.

Suggested Citation

  • Nazli Toraganli, 2010. "Exchange Rate Pass-Through and Exposure in the Turkish Economy," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 10(1), pages 47-69.
  • Handle: RePEc:tcb:cebare:v:10:y:2010:i:1:p:47-69
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    File URL: http://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Central+Bank+Review/2010/Volume+10-1/
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    References listed on IDEAS

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    More about this item

    Keywords

    Exchange rate; Exposure; Pass-through; Industry;

    JEL classification:

    • F3 - International Economics - - International Finance
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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