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Import Demand Function for Turkey

Author

Listed:
  • Olcay Yucel Culha
  • Okan Eren
  • Ferya Ogunc

Abstract

This study aims to revisit the import demand function for Turkey using the updated data and to examine the evolution of income and price elasticities over time. In this respect, a demand function is estimated for the total imports and its subcomponents separately, and the corresponding time varying elasticities are obtained by applying the method of Kalman filter between 2003 and 2017. Using newly published national income series (2009=100), this study finds that the growth of total imports is significantly explained by income and relative price changes. It seems that the income and expenditure elasticities have decreased over time, both in total imports and in sub-components. The decline in income elasticity is mainly due to the decrease in the consumption-expenditure elasticity. The relative price elasticity of imports of consumption and investment goods showed a limited fall over time, while the relative price elasticity of imports of intermediate goods increased significantly.

Suggested Citation

  • Olcay Yucel Culha & Okan Eren & Ferya Ogunc, 2018. "Import Demand Function for Turkey," Working Papers 1803, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:1803
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2018/18-03
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    Cited by:

    1. Thorbecke, Willem & Sengonul, Ahmet, 2023. "The impact of exchange rates on Turkish imports and exports," International Economics, Elsevier, vol. 174(C), pages 231-249.
    2. Mile Bošnjak & Vlatka Bilas & Domagoj Raèiæ, 2019. "Time-varying parameters of Croatian import demand," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 37(2), pages 853-872.
    3. Aysun Türkvatan, 2023. "Exports and imports in Turkey: A regime‐switching approach," The World Economy, Wiley Blackwell, vol. 46(3), pages 791-834, March.

    More about this item

    Keywords

    Import demand; Income elasticity; Relative price elasticity; Kalman filter; Turkish economy;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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