Dynamics of the trade balance: The Turkish J-curve

The J-curve hypothesis suggests a specific pattern for the response of trade balance to real exchange rate changes: a real depreciation initially worsens the trade balance, but through time the trade balance improves, and thus the response of the trade balance over time generates a tilted J shape. This study investigates the existence of a J-curve in the Turkish data in the period of 1987-2000, by using quarterly data. First an error correction model is estimated to differentiate between the long-run equilibrium and short-run dynamics. Then the response of trade balance to real exchange rate shocks are investigated by using the generalized impulse response methodology. Even though the suggested long-run pattern, which is the improvement of the trade balance in response to a real depreciation emerges, our results do not exactly support the J-curve hypothesis in the short-run. In this study we found that the short-run behavior of the trade balance in response to real exchange rate shocks show an S-pattern reminiscent of the Backus et al (1994) rather than the J-curve pattern.J-Curve, trade balance, Marshall-Lerner condition, cointegration, impulse response analysis

Turkish Twin Effects: An Error Correction Model of Trade Balance

Twin deficit hypothesis mainly states that government budget deficits will cause trade deficits. However, this is not the only theoretically possible relationship between the budget deficit and the trade deficit. On the other extreme if Ricardian equivalence hypothesis holds it is also possible that two deficits are not related at all. In this study these hypotheses between the budget deficit and trade deficit for Turkey between 1987 - 2001 period are examined by using the cointegration methodology and by estimating an error correction model. This enabled us to search the relationship between the internal and external deficits both in the short-run and in the long-run. Our analysis showed that there is a long-run relationship between the two deficits. Also the short-run model yielded that worsening of the budget balance worsens the trade balance. Therefore we have concluded that the twin deficit hypothesis holds, and Ricardian equivalence hypothesis is not valid for Turkey during the study period.Twin deficits, trade deficit, budget deficit, Ricardian equivalence, cointegration, error correction models, unit roots, Turkey

Environmental Impact of Customs Union Agreement with EU on Turkey’s Trade in Manufacturing Industry

In this study, we analyze Turkey’s manufacturing industry trade by estimating sectoral import and export demand equations for 1980-2000. The study aims to understand whether the trade in the manufacturing industry complies with pollution haven hypothesis, and whether the free trade environment provided by the customs union (CU) agreement altered the trade pattern of the clean and dirty industries. Results of our econometric models have shown that while CU positively affects the import demand, it does not have any significant impact on the export demand of Turkish manufacturing industry. In terms of the environmental impact, distinction between clean and dirty industries turns out to be significant for both import and export demand. In general, our findings suggest that both clean and dirty industries’ import demand increase during the study period. In terms of export demand, clean industries’ export demand declines whereas dirty industries’ export demand increases compared to the total demand.Environmental impact analysis, EU, Turkey, manufacturing industry

CO2 Emissions vs. CO2 Responsibility: An Input-Output Approach for the Turkish Economy

Recently, global warming (greenhouse effect) and its effects have become one of the hottest topics in the world agenda. There have been several international attempts to reduce the negative effects of global warming. Kyoto Protocol can be cited as the most important agreement which tries to limit the countries’ emissions within a time horizon. For this reason it becomes important to calculate the greenhouse gas emissions of countries. The aim of this study is to estimate the amount of CO2 -the most important greenhouse gas- emissions, for the Turkish economy. An extended input-output model is estimated by using 1996 data in order to identify the sources of CO2 emissions and to discuss the share of sectors in total emission. Besides ‘CO2 responsibility’, which takes into account the CO2 content of imports, is estimated for the Turkish economy. The sectoral CO2 emissions and CO2 responsibilities are compared and these two notions are linked to foreign trade volume. One of the main conclusions is that the manufacturing industry has the first place in both of the rankings for CO2 emissions and CO2 responsibilities; while agriculture and husbandry has the last place.CO2 responsibility, Turkey, input-output analysis

Pollution Haven Hypothesis and the Role of Dirty Industries in Turkey’s Exports

Pollution haven hypothesis argues that the industries that are highly pollution intensive i.e. dirty industries, have been migrating from developed economies to the developing world. It is argued that the environmental concerns of the developed economies caused them to enact strict environmental regulations, which have increased the cost of production of the dirty industries at home. On the other hand, the developing countries with their low wages and lax environmental regulations have been attractive alternative producers in these sectors. At the same time this migration is also beneficial for developing countries that are in need of financial resources for industrial development. Consequently, developing countries provide pollution havens for dirty industries. In this process while the dirty industries have been migrating to the developing countries, the developed countries also have become net importers of these sectors. In this study the pollution haven argument for Turkey, for 1994-1997 period is examined. The study focuses on the pollution haven hypothesis from trade perspective by looking at the manufacturing industry data at 4-digit ISIC detail by using the panel data approach. It is found that exports increase as the dirtiness of the industries increases, providing some evidence for the pollution haven hypothesis.Turkey, Pollution Haven Hypothesis, environment, manufacturing

Pricing to market : an evaluation for Turkey

This thesis investigates pricing to market behavior in the exports of Turkey, which is a small economy. The investigated sectors are hazelnut, dried grape, dried apricot, dried fig and feldspar. The sectors are selected because Turkey is the leading producer and exporter for these products in the world. We apply pricing to market model for the exports from Turkey to each of the largest importer countries and the world in total for each product to check whether there is monopolistic behavior in the markets. We also check whether there is complete local currency price stability in the investigated markets. The relationship between the import shares of destination markets in the Turkey’s exports and the estimated pricing to market elasticities are compared as well. In general, we find that there is pricing to market in the exports of Turkey for the investigated sectors

Dynamics of the Trade Balance: The Turkish J-Curve

The J-curve hypothesis suggests a specific pattern for the response of the trade balance to real exchange rate changes; a real depreciation initially worsens the trade balance, but through time the trade balance improves, and thus the response of the trade balance over time generates a tilted J-shape. This study investigates the existence of a J-curve in the Turkish data in the 1987-2000 period by using quarterly data. First, an error correction model is estimated to differentiate between the long-run equilibrium and short-run dynamics. Then the response of trade balance to real exchange rate shocks is investigated by using the generalized impulse response methodology. Even though the suggested long-run pattern, which is the improvement of the trade balance in response to a real depreciation emerges, our results do not exactly support the J-curve hypothesis in the short run.cointegration, impulse response analysis, J-curve, Marshall�, Lerner condition, trade balance,

Türki̇ye i̇çi̇n bi̇r i̇kti̇sadi̇ faali̇yet göstergesi̇ oluşturulması

Bu tezde, Türkiye ekonomisi için 1988-2020 dönemini kapsayan bir iktisadi faaliyet göstergesi oluşturulmuştur. Göstergenin oluşturulmasında, makroekonomik değişkenlerin bir göstergeye sentezlenmesinde başarılı olduğu için, dinamik faktör modeli yönteminden faydalanılmıştır. Gösterge hesaplanırken sanayi üretim endeksi, elektrik üretimi, toplam araç üretimi, son 3 aydaki üretim hacmi, reel kesim güven endeksi, ithalat miktar endeksi, tarım-dışı istihdam, kredi stoku, CDS ve GSYİH verileri kullanılmıştır. Veri seçimi, sert-eşikleme yöntemiyle yapılmıştır. Bu kapsamda, öncelikle değişkenler faaliyet (gerçekleşme verileri), faaliyet (anket göstergeleri), ticaret, istihdam ve finansal değişkenler olmak üzere beş gruba ayrılmıştır. Her kategori için aday değişkenler belirlendikten sonra, sert-eşikleme yöntemi kullanılarak veri seçimi tamamlanmıştır. Sonuçlar, aylık iktisadi faaliyet göstergemizin, Türkiye ekonomisinin geçmiş daralma dönemlerini tespit etmede ve ekonomik faaliyetin seyri hakkında zamanlı bilgi sağlamada başarılı olduğunu göstermektedir.In this thesis, a monthly economic activity indicator is constructed for the Turkish economy for the period 1988-2020. Dynamic factor modelling framework is utilized in the estimation of the indicator because of being good at synthesizing macroeconomic variables into an indicator. Variables used in the estimation of the indicator are industrial production index, electricity production, total vehicles production, the volume of production over the past 3 months, real sector confidence index, import volume index, non-farm employment, credit stock, CDS and GDP. Data selection is done with the help of the hard-thresholding method. In this context, first of all, the variables are categorized into five types as: activity (hard data), activity (survey-based data or soft data), trade, employment and financial variables. After determining the candidate variables for each category, data selection is finalized by using the hard-thresholding method. The results indicate that our monthly economic activity indicator is successful in detecting the past recessionary periods of the Turkish economy and providing timelier information about the course of economic activity

Türkiye'nin tüketim, yatırım ve aramalı ticaret dengesinde iki taraflı j-eğrisi etkisi.

This study analyzes the J-curve effect for Turkey’s bilateral trade with her three main trading partners; Germany, USA and Italy, for consumption, capital and intermediate goods. The bounds test is used to test for cointegration among the trade balance, the real bilateral exchange rate, the real domestic income and the real foreign income. The results show that the real exchange rate is not a significant determinant of trade in the short run. In the long run, it is significant only for trade with USA in consumption goods. Moreover, J-curve does not exist for Turkey’s bilateral trade with Germany, USA, and Italy in consumption, capital and intermediate goods. The results support existence of a link between the bilateral trade balances and the real domestic income both in the short run and the long run