THE IMPACTS OF EXCHANGE-RATE POLICIES ON THE FOREIGN TRADE: THE CASE OF TURKEY

Year 2008, Volume: 1 Issue: 2, 247 - 256, 06.06.2014

Yusuf Akan İbrahim Arslan

Abstract

This study aims at exploring the effects of exchange rate policies on the foreign trade. In order to capture this effect, foreign exchange rates and terms of trade are analyzed both theoretically and within the context of their historical development. As well as theoretical relationship of these variables, their development and application especially after 1980 in Turkey are also studied. Throughout this article, causality relation and its direction between exchange rate and foreign trade has been studied. They are analyzed with Granger causality test and regression analysis based on 1980-2006 yearly data. It is seen that foreign exchange rates have undeniable however in the short term- effects on the terms of trade but moreover, in the long term the general durability and productivity is more vital.

Keywords

Exchange Rate, Foreign Trade, Turkish Economy

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