Kırılgan Ekonomilerde Döviz Kuru Oynaklığının Dış Ticaret Üzerine Etkisi[The Impact of Exchange Rate Volatility on Foreign Trade in Fragile Economies]

The literature on the impact of exchange rate volatility on foreign trade is based on two different views. The first view suggests that volatility will reduce foreign trade through real and financial risk factors. The opposite hypothesis is that trade volume and flows will determine exchange rate volatility. In order to contribute to this discussion, exchange rate volatility and the effect of exchange rate on exports and imports are analyzed by panel FGLS method. The panel data set established for seven fragile economies (Argentina, Brazil, Indonesia, Mexico, Russia, South Africa, and Turkey) that are high macroeconomic risks against exchange rate changes, and between the period 1990-2017. In studies in the literature, exchange rate volatility is generally calculated with the GARCH method. Unlike other studies, the Hodrick-Prescott(HP) filter method was used to calculate exchange rate volatility. According to the findings, volatility has a negative impact on both export and import volume in these countries. Therefore, it is seen that it reduces total foreign trade through both channels. When the findings of both models on exchange rate elasticities are compared, it is seen that the elasticity of imports is greater than that of exports. This situation indicates that the countries in the sample can balance their foreign deficits at the expense of reducing their total trade with their competitive exchange rate policy. Exchange rate volatility has a higher potential to decrease exports than imports. The findings show the necessity of developed financial markets in fragile economies to minimize the effect of exchange rate volatility on trade.