Dynamics of the trade balance - The Turkish J-curve

Akbostanci E.

EMERGING MARKETS FINANCE AND TRADE, cilt.40, sa.5, ss.57-73, 2004 (SSCI) identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 40 Sayı: 5
  • Basım Tarihi: 2004
  • Doi Numarası: 10.1080/1540496x.2004.11052584
  • Dergi Adı: EMERGING MARKETS FINANCE AND TRADE
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus
  • Sayfa Sayıları: ss.57-73
  • Anahtar Kelimeler: cointegration, impulse response analysis, J-curve, Marshall-Lerner condition, trade balance, IMPULSE-RESPONSE ANALYSIS, EXCHANGE-RATES, MULTIVARIATE MODELS, SERIES
  • Orta Doğu Teknik Üniversitesi Adresli: Evet

Özet

The J-curve hypothesis suggests a specific pattern for the response of the trade balance to real exchange rate changes; a real depreciation initially worsens the trade balance, but through time the trade balance improves, and thus the response of the trade balance over time generates a tilted J-shape. This study investigates the existence of a J-curve in the Turkish data in the 1987-2000 period by using quarterly data. First, an error correction model is estimated to differentiate between the long-run equilibrium and short-run dynamics. Then the response of trade balance to real exchange rate shocks is investigated by using the generalized impulse response methodology Even though the suggested long-run pattern, which is the improvement of the trade balance in response to a real depreciation emerges, our results do not exactly support the J-curve hypothesis in the short run.