An Asymmetric Study of J-curve Effect in the Turkish Service Trade

There is a new strand of the literature in which researchers try to test the J-curve phenomenon using trade data in services. This literature is in its infancy, and any new addition must be welcomed. We add to this literature by testing the phenomenon using quarterly data over the 2005Q1-2022Q4 period from eight Turkish service industries. The symmetric and asymmetric impacts of exchange rate changes on each service trade balance are estimated empirically by employing linear and nonlinear autoregressive distributed lag approaches to cointegration methods. Considering the two approaches to be complementary, we find support for the J-curve effect in four service industries, i.e., in insurance and pensions, transport, travel industries, and intellectual property. Thus, lira depreciation will improve the trade balance of these four industries in the long run, while short-run effects oscillate.