The Evaluation of Turkey's Foreign Trade during COVID-19

Year 2023, , 1536 - 1556, 25.05.2023

Mortaza Ojaghlou

https://doi.org/10.25295/fsecon.1265568

Abstract

The value of the Turkish currency decreased by 44% in 2021. The trade balance was directly impacted by exchange rate fluctuation. Moreover, COVID-19 had a significant impact on the trade balance globally as well as in Turkey. In this study, we attempt to assess how COVID-19 has affected trade between Turkey and the EU27 counties. We employ the J-curve and S-curve approaches using various samples and sub-samples. Before examining how COVID-19 influences trade balances, we first looked at the long-term relationship of bilateral trade between Turkey and the EU27, including the impact of the real exchange rate on the trade balance. The findings indicate that, first; there is no indication of a J-curve or an S-curve in Turkey’s trade balance. Second, the Turkish trade balance benefited more from a real fall of the Turkish currency during the pandemic era. In comparison to pre-pandemic correlations, the pandemic cross-correlation coefficients are lower. Despite some delays, it turned out well. The Turkish trade balance is improved by the weakening of the Turkish Lira and the effects of COVID-19 during the pandemic, even if there is no indication of a J-curve or an S-curve.

Keywords

COVID-19, International Trade, J Curve, Exchange Rate, Marshall-Lener conditions

Supporting Institution

no application

Project Number

no application

COVID-19 Döneminde Türkiye Dış Ticaretinin Değerlendirilmesi

Abstract

2021 yılında Türk lirası %44 değer kaybetti. Ticaret dengesi kur dalgalanmasından doğrudan etkilenmektedir. Öte yandan, COVID-19, Türkiye'de olduğu gibi dünyada da ticaret dengesinin önemli ölçüde etkilenmesine sebebiyet vermiştir. Bu çalışmada, COVID-19'un-Türkiye ile AB27 ülkeleri arasındaki ticareti nasıl etkilediğini değerlendirmeye çalıştık. Çeşitli dönem ve alt dönemlerini kullanarak J-eğrisi ve S-eğrisi yaklaşımlarını baz aldık. COVID-19'un ticaret dengelerini nasıl etkilediğini incelemeden önce, reel döviz kurunun ticaret dengesi üzerindeki etkisi de dahil olmak üzere ilk olarak Türkiye ile AB27 arasındaki ikili ticaretin uzun vadeli ilişkilerini ele aldık. Bulgular, ilk olarak, Türkiye'nin ticaret dengesi için J-eğrisi veya S-eğrisi etkisinin olmadığı kanıtına varılmıştır. İkincisi, Türk ticaret dengesi, salgın döneminde Türk parasının reel değer kaybından dolayı yararlandığı gözlenmiştir. Pandemi öncesi korelasyonlara kıyasla, pandemi sırasında çapraz korelasyon katsayıları daha düşüktür. Türk ticaret dengesi, bir J-eğrisi veya S-eğrisi belirtisi olmasa bile, pandemi sırasında Türk lirasının değer kaybı ile birlikte COVID-19'un etkilerinden yararlanmıştır.

Keywords

COVID-19, Uluslararası Ticaret, J Eğrisi, Döviz Kuru, Marshall-Lerner Koşulu

Project Number

no application

References

• Aftab, Z., & Khan, S. (2008). Bilateral J-Curves between Pakistan and Her Trading Partners (PIDE-Working Paper 2008:45). Pakistan Institute of Development Economics. https://econpapers.repec.org/paper/pidwpaper/2008_3a45.htm
• Backus, D. K., Kehoe, P. J. & Kydland, F. E. (1994). Dynamics of the Trade Balance and the Terms of Trade: The J-Curve?. American Economic Review, 84(1), 84–103.
• Baek, J. (2007). The J-Curve Effect and the US-Canada Forest Products Trade. Journal of Forest Economics, 13(4), 245–258.
• Bahmani, M., Harvey, H. & Hegerty, S. W. (2013). Empirical Tests of The Marshall‐Lerner Condition: A Literature Review. Journal of Economic Studies, 40(3), 411–443. https://doi.org/10.1108/01443581311283989
• Bahmani-Oskooee, M. (1985). Devaluation and the J-Curve: Some Evidence from LDCs. The Review of Economics and Statistics, 67(3), 500–504. https://doi.org/10.2307/1925980
• Bahmani-Oskooee, M. & Ardalani, Z. (2007). Is there a J-Curve at the Industry Level? Economics Bulletin, 6(26), 1–12.
• Bahmani-Oskooee, M. & Brooks, T. J. (1999). Bilateral J-Curve between U.S. and Her Trading Partners. Weltwirtschaftliches Archiv, 135(1), 156–165. https://doi.org/10.1007/BF02708163
• Bahmani-Oskooee, M. & Durmaz, N. (2016, January 12). Asymmetric Cointegration and the J-Curve: Evidence from Commodity Trade Between Turkey and EU [MPRA Paper]. https://mpra.ub.uni-muenchen.de/83183/
• Bahmani-oskooee, M. & Fariditavana, H. (2014). Do Exchange Rate Changes have Symmetric Effect on the S-Curve?. Economics Bulletin, 34(1), 164–173.
• Bahmani-Oskooee, M., Gelan, A. & Ratha, A. (2008). S-curve Dynamics of Trade in Africa. African Development Review, 20(2), 335-342. https://doi.org/10.1111/j.1467-8268.2008.00187.x
• Bahmani-Oskooee, M., Halicioglu, F. & Hegerty, S. W. (2016). Mexican Bilateral Trade and the J-Curve: An Application of The Nonlinear ARDL Model. Economic Analysis and Policy, 50(C), 23–40.
• Bahmani-Oskooee, M. & Karamelikli, H. (2020). The Turkey-US Commodity Trade and The Asymmetric J-Curve. Economic Change and Restructuring. https://doi.org/10.1007/s10644-020-09298-1
• Bahmani-Oskooee, M. M. & Goswami, G. G. (2003). A Disaggregated Approach to Test The J-Curve Phenomenon: Japan Versus Her Major Trading Partners. Journal of Economics and Finance, 27(1), 102-113. https://doi.org/10.1007/BF02751593
• Bahmani-Oskooee, M. & Ratha, A. (2004). The J-Curve Dynamics of U.S. Bilateral Trade. Journal of Economics and Finance, 28(1), 32-38. https://doi.org/10.1007/BF02761452
• Bahmani‐Oskooee, M. & Ratha, A. (2007). The S‐Curve Dynamics of US Bilateral Trade. Review of International Economics, 15(2), 430-439.
• Bahmani-Oskooee, M. & Ratha, A. (2009). S-Curve Dynamics of Trade: Evidence from US-Canada Commodity Trade. Economic Issues Journal Articles, 14(1), 1-16.
• Bahmani-Oskooee, M. & Ratha, A. (2010). S-Curve Dynamics of Trade Between U.S. and China. China Economic Review, 21(2), 212-223. https://doi.org/10.1016/j.chieco.2009.06.006
• Bahmani-Oskooee, M. & Wang, Y. (2006). The J-Curve: China Versus Her Trading Partners. Bulletin of Economic Research, 58(4), 323-343. https://doi.org/10.1111/j.1467-8586.2006.00247.x
• Halicioglu, F. (2008). The Bilateral J-Curve: Turkey versus Her 13 Trading Partners’. Journal of Asian Economics, 19, 236-243. https://doi.org/10.1016/j.asieco.2008.02.006
• Hsing, Y. (2009). Test of the J-Curve for Six Selected New EU Countries. International Journal of Economic Policy in Emerging Economies, 2(1), 76–85.
• Karamelikli, H. (2016). J-Curve Effect on Turkey’s Foreign Trade Balance. Journal of the Human and Social Science Researches, 5, 389–402.
• Krugman, P. R., Obstfeld, M. & Melitz, M. (2014). International Economics: Theory and Policy (10th Edition). Pearson.
• Kyophilavong, P., Shahbaz, M. & Uddin, G. S. (2013). Does J-Curve Phenomenon Exist in Case of Laos? An ARDL Approach. Economic Modelling, 35, 833-839. https://doi.org/10.1016/j.econmod.2013.08.014
• Magee, S. P. (1973). Currency Contracts, Pass-Through, and Devaluation. Brookings Papers on Economic Activity, 4(1), 303–325.
• Ojaghlou, M. (2021). J-Curve and Impact of Exchange Rate on Bilateral Trade between Turkey and its Two Trading Partners; Germany and the United States. Turkish Online Journal of Qualitative Inquiry, 12(8), 3781–3789.
• Ojaghlou, M. & Uğurlu, E. (2022). Is There a J-Curve Under COVID-19 Effects. China Economic Journal, 0(0), 1-19. https://doi.org/10.1080/17538963.2022.2079194
• Pesaran, M. H., Shin, Y. & Smith, R. J. (2001). Bounds Testing Approaches to The Analysis of Level Relationships. Journal of Applied Econometrics, 16(3), 289–326. https://doi.org/10.1002/jae.616
• R. Krugman, P., Obstfeld, M. & Melitz, M. (n.d.). International Economics (9th Edition). https://b-ok.org/book/5156248/b6ae26?dsource=recommend
• Rose, A. K. & Yellen, J. L. (1989). Is There a J-Curve?. Journal of Monetary Economics, 24(1), 53-68. https://doi.org/10.1016/0304-3932(89)90016-0
• Shin, Y., Yu, B. & Greenwood-Nimmo, M. (2014). Modelling Asymmetric Cointegration and Dynamic Multipliers in a Nonlinear ARDL Framework. R. C. Sickles & W. C. Horrace (Ed.), Festschrift in Honor of Peter Schmidt: Econometric Methods and Applications (281-314). Springer. https://doi.org/10.1007/978-1-4899-8008-3_9
• Ugurlu, E. (2023). Ekonometri Uygulamaları Kılavuzu.
• Zivot, E. & Wang, J. (2006). Modeling Financial Time Series with S-PLUS. https://link.springer.com/book/10.1007/978-0-387-32348-0