DOES REAL EXCHANGE RATE MATTER FOR EMERGING MARKETS’ INTERNATIONAL TRADE? A GRAVITY MODEL APPROACH FOR TURKEY

From its perspective, we apply the gravity panel data model (log of OLS and REM models) to Turkey’s bilateral trade flows over 1990-2005, using annual data. In our augmented gravity model, we test the model for the effects of real exchange rate (RER), and a set of dummy variables (Costum Union (COSTUM), The crisis of 1994 (D_94) and 2001 (D_01), either facilitating or restricting trade between pairs of countries, on trade performance of Turkey, as well as the core variables; distance (DIST), incomes (GDPs or PPP) and populations (POPs) of the trading countries, as quoted in standart models