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A Survey On The Factors Affecting Current Account Balance Of Turkey: Evidence From Ardl-Bounds Testing Approach

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  • GÖKHAN ÖZDAMAR

    (Süleyman Demirel University)

Abstract

Main objective of this study is to analyze the relationships between the current account balance and selected major macroeconomic variables in Turkish economy. In this respect ARDL-Bounds testing approach is applied. Results of the study related to the long-run show that the international terms of trade is a strong explanatory variable of the current account balance of Turkey. This result implies that Harberger-Laursen-Metzler (HLM) hypothesis is valid for Turkey. Findings reveal that also foreign trade balance has a strong effect on the current account balance of Turkey while the gross domestic product is found to be statistically significant but the effect level is quite low. Domestic interest rate and the real effective exchange rate variables are found to be statistically insignificant in the long-run. Error correction model results for the short-run reveal that current account balance of Turkey is mostly affected from the lagged value of itself, from foreign trade balance and also from the lagged value of real effective exchange rate.

Suggested Citation

  • Gökhan Özdamar, 2016. "A Survey On The Factors Affecting Current Account Balance Of Turkey: Evidence From Ardl-Bounds Testing Approach," Proceedings of International Academic Conferences 3506081, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iacpro:3506081
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    References listed on IDEAS

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    1. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    2. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    3. Serena Ng & Pierre Perron, 2001. "LAG Length Selection and the Construction of Unit Root Tests with Good Size and Power," Econometrica, Econometric Society, vol. 69(6), pages 1519-1554, November.
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    Cited by:

    1. Guellil, Mohammed Seghir & Sari-Hassoun, Salah Eddine & Chica-Olmo, Jorge & Saraç, Mehmet, 2022. "What are the main factors driving behind the MENA countries current account deficit? A panel logit approach analysis [¿Cuáles son los principales factores que impulsan el déficit de cuenta corrient," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 33(1), pages 134-153, June.

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    More about this item

    Keywords

    Current Account Balance; Turkey; ARDL-Bounds testing;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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