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The Asymmetric Effects of Third-Country Exchange Rate Volatility on Turkish-German Commodity Trade

Author

Listed:
  • Waqar Khalid
  • Irfan Civcir
  • Hüseyin Özdeşer

Abstract

This study examines the asymmetric effects of third-country exchange rate volatility on Turkish-German commodity trade. We analyzed annual time-series data spanning 1980-2022 for 79 (93) Turkish export (import) industries. The ARDL model found that third-country volatility, using the lira-dollar, had a significant short-term symmetric effect on 59 (67) Turkish export (import) industries. The NARDL model found that third-country volatility had a short-run asymmetric effect on trade volumes in more than half of the Turkish export and import industries. However, the short-run asymmetric effects turned into long-run asymmetric effects in about 50 percent of the industries. The results establish that nonlinear models lead to more significant short-run and long-run effects. The empirical evidence shows that the asymmetric assumption alone is insufficient, and third-country volatility should also be considered. The results suggest that all traders should consider how policy changes in a third-country may affect cross-country trade when designing their trade policies in a diversified trade environment. JEL: F14, F31, F41.

Suggested Citation

  • Waqar Khalid & Irfan Civcir & Hüseyin Özdeşer, 0. "The Asymmetric Effects of Third-Country Exchange Rate Volatility on Turkish-German Commodity Trade," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 0(0).
    • Handle: RePEc:voj:journl:v:0:y:0:i:0:id:1729
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    File URL: https://panoeconomicus.org/index.php/jorunal/article/view/1729/794
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    More about this item

    Keywords

    Exchange rate volatility; Asymmetric effects; Third-country volatility; NARDL; Commodity trade;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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