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Export Dynamics in Turkey

Author

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  • Cagri Sarikaya

Abstract

This paper presents a structural vector autoregression model to explore the export dynamics in Turkey. Given the notable export performance after 2002, albeit high-rated real appreciation of Turkish lira, we investigate the role of unit wages in explaining the high export growth. We observe that, through historical decomposition of exports, real unit wage, not the real exchange rate, has been the main determinant of Turkish exports after 1999. Moreover, the impulse response analysis suggests that the short-term impact of a real unit wage shock on exports is larger compared to that of the real exchange rate. The same conclusion applies even for the long-run effects, provided that the confidence in the economy is maintained. We also demonstrate the importance of real unit wages by estimating an error-correction model, which provides consistent results with the impulse response analysis. The analysis points out that the real exchange rate is not the sole determinant of the export behavior in Turkey. The main point of the study is that, export growth can be sustained, even when the real exchange rate is appreciating, if the improvement in labor productivity can be sustained.

Suggested Citation

  • Cagri Sarikaya, 2004. "Export Dynamics in Turkey," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 4(2), pages 41-64.
    • Handle: RePEc:tcb:cebare:v:4:y:2004:i:2:p:41-64
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Central+Bank+Review/2004/Volume+4-2/
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Ahmet Faruk Aysan & Yavuz Selim Hacihasanoglu, 2007. "Investigation on the Determinants of Turkish Export-Boom in 2000s," Working Papers 2007/19, Bogazici University, Department of Economics.
    2. Özler, Sule & Taymaz, Erol & YIlmaz, Kamil, 2009. "History Matters for the Export Decision: Plant-Level Evidence from Turkish Manufacturing Industry," World Development, Elsevier, vol. 37(2), pages 479-488, February.
    3. Faruk Aydin & Hulya Saygili & Mesut Saygili, 2007. "Empirical Analysis of Structural Change in Turkish Exports," Working Papers 0708, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    4. M. Faruk Aydin & Ugur Ciplak & Eray M. Yucel, 2004. "Export Supply and Import Demand Models for the Turkish Economy," Working Papers 0409, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    5. Ghassan, Hassan B., 2007. "La condition de Marshall-Lerner-Robinson est-elle stable ? Approche par le test GLS cointégration à niveau et puissance améliorés [Does the Marshall-Lerner-Robinson condition verify the stability? ," MPRA Paper 56354, University Library of Munich, Germany, revised 15 Jan 2008.

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    More about this item

    Keywords

    Structural Vector Autoregression; Export Dynamics; Historical Decomposition;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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