Abstract
The objective of this study is to investigate Turkey’s trade deficit through examining the dynamics of trade balance in order to understand which of the variables deteriorate this deficit and also in what manner these variables affect trade balance. In this respect, the real exchange rate effect on trade balance both in the short run and long run has been examined by using quarterly data set from 1992 to 2011 for Turkey. The Vector Error Correction Model (VECM) is applied with Johansen co-integration analysis, Granger causality test and generalized impulse response analysis. According to Johansen cointegration analysis, under trace and maximum eigenvalue tests variables found cointegrated which means there is long run relationship among variables. This result enables us to apply VECM.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.