The effect of real exchange rate on trade balance: The test of Marshall Lerner condition for Turkey


Yavuz N., Guris B., Kiran B.

IKTISAT ISLETME VE FINANS, sa.287, ss.69-90, 2010 (SSCI) identifier

  • Yayın Türü: Makale / Tam Makale
  • Basım Tarihi: 2010
  • Doi Numarası: 10.3848/iif.2010.287.2508
  • Dergi Adı: IKTISAT ISLETME VE FINANS
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI)
  • Sayfa Sayıları: ss.69-90
  • İstanbul Üniversitesi Adresli: Evet

Özet

The effect of real exchange rate on trade balance: The test of Marshall Lerner condition for Turkey The aim of the paper is to test validity of the Marshall Lerner condition for Turkey by investigating the effect of real exchange rate on trade balance. For this purpose, recently developed Bounds test co integration approach based on Autoregressive Distributed Lag (ARDL) model is used The long run relationship between trade balance and trade balance determinants such as foreign income, domestic income and real exchange rate is determined from the models for quarterly data over the 1988-2007 periods. Our empirical findings from the long run static analysis of estimated ARDL model reveal that the Marshall Lerner condition is not valid and there is a J-curve effect according to the short term dynamics obtained from the estimation of error correction model.