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Exchange rate pass-through in Turkish export and import prices

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  • R. Barıs Tekin
  • M. Ege Yazgan

Abstract

This article examines exchange rate pass-through into prices of internationally traded goods in the case of a small emerging open market economy such as Turkey. In this study, we provide empirical evidence on complete pass-through in export prices in Turkey using aggregate data on the manufacturing sector. Our data do not however support complete pass-through in import prices in Turkey. This contradicts with the findings of the existent literature, which typically concludes that the degree of pass-through in import prices is higher than the one of export prices. This can be interpreted as a result of competition between import and import substituting industries where importers fall short of competing successfully with import substituting sectors. Although Turkish importers can be responsive to exchange rate changes to a certain degree in the short-run, in the long-run, they seem to lose their market power perhaps as a result of swift competition. A complete exchange rate pass-through to export prices in Turkey implies that the Turkish manufacturing export sector has the competitive strength to transmit exchange rate movements into their prices.

Suggested Citation

  • R. Barıs Tekin & M. Ege Yazgan, 2009. "Exchange rate pass-through in Turkish export and import prices," Applied Economics, Taylor & Francis Journals, vol. 41(17), pages 2221-2228.
    • Handle: RePEc:taf:applec:v:41:y:2009:i:17:p:2221-2228
    DOI: 10.1080/00036840701222454
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    References listed on IDEAS

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    1. Campa, Jose M. & Goldberg, Linda S., 2002. "Exchange rate pass-through into import prices: A macro or micro phenomenon?," IESE Research Papers D/475, IESE Business School.
    2. Anderton, Robert, 2003. "Extra-euro area manufacturing import prices and exchange rate pass-through," Working Paper Series 219, European Central Bank.
    3. Hakan Kara & Fethi Ogunc, 2005. "Exchange Rate Pass-Through in Turkey : It is Slow, but is it Really Low?," Working Papers 0510, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    4. Mr. Hamid Faruqee, 2004. "Exchange Rate Pass-Through in the Euro Area: The Role of Asymmetric Pricing Behavior," IMF Working Papers 2004/014, International Monetary Fund.
    5. Mr. Marco Rossi & Mr. Daniel Leigh, 2002. "Exchange Rate Pass-Through in Turkey," IMF Working Papers 2002/204, International Monetary Fund.
    6. Ms. Agnes A Belaisch, 2003. "Exchange Rate Pass-Through in Brazil," IMF Working Papers 2003/141, International Monetary Fund.
    7. Hakan Kara & Hande Kucuk Tuger & Umit Ozlale & Burc Tuger & Devrim Yavuz & Eray M. Yucel, 2005. "Exchange Rate Pass-Through in Turkey : Has it Changed and to What Extent?," Working Papers 0504, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
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    Cited by:

    1. Engin AKMAN, 2016. "Impacts Of Euro/Usd Volatility On Steel Prices Of Turkey," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 5(1), pages 1-17, January.
    2. Umar Bala & Patchaya Songsiengchai & Lee Chin, 2017. "Asymmetric behavior of exchange rate pass-through in Thailand," Economics Bulletin, AccessEcon, vol. 37(2), pages 1289-1297.
    3. Yusuf Emre Akgunduz & Emine Meltem Bastan & Ufuk Demiroglu & Semih Tumen, 2021. "Product‐level estimates of exchange rate pass‐through: Evidence from Turkey☆," The World Economy, Wiley Blackwell, vol. 44(7), pages 2203-2226, July.
    4. M. Faruk Aydin & Selcuk Gul, 2020. "The Role of Real Exchange Rates in Export Price Determination," CBT Research Notes in Economics 2006, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.

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