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Validity of J-Curve for Turkey and Its Main External Trade Partners: An Application of a Panel Data Approach

Year 2021, Volume 29, Issue 50, 149 - 168, 31.10.2021
https://doi.org/10.17233/sosyoekonomi.2021.04.08

Abstract

External trade cannot create the expected result for some countries due to their economic structures or policies. Economies could encounter severe foreign trade deficits and the risk of an economic crisis. Thus, researchers and policymakers analyse the dynamics of countries’ external trade balances. Turkey’s persistent current account deficit is one of the most significant macroeconomic problems. Turkey depreciated the Turkish Lira against foreign currencies to reduce its foreign trade deficit in the past. Using panel data analysis, the current study tests the J-curve for Turkey and its six main foreign trade partner countries - Russia, USA, Germany, UK, Italy, and China. Results do not support the validity of the J-curve hypothesis in the long run. Test results analysing the short-run indicate that the whole panel is statistically insignificant.

References

  • Akbostanci, E. (2004), “Dynamics of The Trade Balance the Turkish J-curve”, Emerging Markets Finance and Trade, 40(5), 57-73.
  • Akkaya, O. (2018), “Türkiye ve Türkiye’nin Dış Ticaret Partnerleri Arasındaki İki Yanlı J eğrisi: 1996-2006 Dönemi İncelemesi”, Finans Ekonomi ve Sosyal Araştırmalar Dergisi (FESA), 3(1), 328-338.
  • Ali, S.Z. & S. Anwar (2018), “Anticipated versus Unanticipated Terms of Trade Shocks and the J-Curve Phenomenon”, Journal of International Money and Finance, 81, 1-19.
  • Backus, D.K. & P.J. Kehoe & F.E. Kydland (1994), “Dynamics of Trade Balance and the Terms of Trade: the J-Curve?”, American Economic Review, 84(1), 84-103.
  • Bahmani-Oskooee, M. & A.M. Kutan (2009), “The J-curve in the Emerging Economies of Eastern Europe”, Applied Economics, 41(20), 2523-2532.
  • Bahmani-Oskooee, M. & H. Fariditavana (2015), “Nonlinear ARDL Approach, Asymmetric Effects and the J-curve”, Journal of Economic Studies, 42(3), 9-530.
  • Bahmani-Oskooee, M. & H. Fariditavana (2016), “Nonlinear ARDL Approach and the J-curve Phenomenon”, Open Economies Review, 27(1), 51-70.
  • Bahmani-Oskooee, M. & H. Masoomeh (2012), “German-US Commodity Trade: Is There a J-curve Effect?”, Applied Economics Quarterly, 58(4), 327-353.
  • Bahmani-Oskooee, M. & N. Bose & Y. Zhang (2018), “Asymmetric Cointegration, Nonlinear ARDL, and the J-curve: a Bilateral Analysis of China and its 21 Trading Partners”, Emerging Markets Finance and Trade, 54(13), 3131-3151.
  • Bai, J. (2009), “Panel Data Models with Interactive Fixed Effects”, Econometrica, 77(4), 1229-1279.
  • Bal, H. & M. Demiral (2012), “Reel Döviz Kuru ve Ticaret Dengesi: Türkiye’nin Almanya ile Ticareti Örneği (2002.01-2012.09)”, Ç.Ü. İ.İ.B.F. Dergisi, 16(2),45-64.
  • Brada, J.C. & A.M. Kutan & S. Zhou (1997), “The Exchange Rate and the Balance of Trade: The Turkish Experience”, The Journal of Development Studies, 33(5), 675-692.
  • Breitung, J. & S. Das (2005), “Panel Unit Root Tests Under Cross-Sectional Dependence”, Statistica Neerlandica, 59(4), 414-433.
  • Breusch, T.S. & A.R. Pagan (1980), “The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics”, The Review of Economic Studies, 47(1), 239-253.
  • Chudik, A. & M.H. Pesaran (2015), “Common Correlated Effects Estimation of Heterogeneous Dynamic Panel Data Models with Weakly Exogenous Regressors”, Journal of Econometrics, 188(2), 393-420.
  • Demirden, T. & I. Pastine (1995), “Flexible Exchange Rates and the J-curve: An Alternative Approach”, Economics Letters, 48, 373-377.
  • Dickey, D.A. & W.A. Fuller (1979), “Distribution of the Estimators for Autoregressive Time Series with a Unit Root”, Journal of the American Statistical Association, 74(366a), 427-431.
  • Elmas, Y. & Y. Elmas (2019), “J Eğrisi Etkisinin Eşbütünleşme, Nedensellik ve Wilcoxon İşaret Sıra Testi ile Değerlendirilmesi: Bandırma İlçesi Örneği”, 2. Uluslararası Bandırma ve Çevresi Sempozyumu, 17-19 Eylül 2019, Bandırma, 295-312.
  • Halicioglu, F. (2008), “The Bilateral J-curve: Turkey versus her 13 Trading Partner”, Journal of Asian Economics, 19(3), 236-243.
  • Hepaktan, C.E. (2016), “Yapısal Kırılmalar Altında Türkiye’de J Eğrisinin Analizi”, Celal Bayar Üniversitesi Sosyal Bilimler Dergisi, 14(4), 75-102.
  • Hsing, Y. & B.S. Sergi (2010), “Test of the Bilateral Trade J-curve between the USA and Australia, Canada, New Zealand and The UK”, International Journal of Trade and Global Markets, 3(2), 189-198.
  • Kao, C. (1999), “Spurious Regression and Residual-based Tests for Cointegration in Panel Data”, Journal of Econometrics, 90(1), 1-44.
  • Kösekahyaoğlu, L. & A. Kemeç (2015), “J Eğrisi Analizi ve Türkiye Üzerine Bir Uygulama” Uluslararası İktisadi ve İdari Bilimler Dergisi, 1(2), 1-29.
  • Kösekahyaoğlu, L. & İ. Karataşlı (2018), “Türkiye - AB Dış Ticaretinde J Eğrisi Etkisi : 1994- 2016 Dönemi Üzerine Ampirik Bir İnceleme”, SDÜ İİBF Dergisi, 23(Özel Sayı), 831-844.
  • Lerner, A.P. (1944), The Economics of Control: Principles of Welfare Economics, The Macmillan Company, New York.
  • Magee, S.P. (1973), “Currency Contracts, Pass-through, and Devaluation”, Brookings Papers of Economic Activity, 1973(1), 303-323.
  • Mark, N. & D. Sul (1999), “A Computationally Simple Cointegration Vector Estimator for Panel Data”, Ohio State University Manuscript, <https://www.researchgate.net/publication/2312524_A_Computationally_Simple_Cointegration_Vector_Estimator_for_Panel_Data>, 01.05.2020.
  • Marshall, A. (1923), Money, Credit and Commerce, Macmillan, London.
  • McCoskey, S. & C. Kao (1998), “A Residual-based Test of the Null of Cointegration in Panel Data”, Econometric Reviews, 17(1), 57-84.
  • Moffett, M.H. (1989), “The J-Curve Revisited: An Empirical Examination for the United States”, Journal of International Maney and Finance, 8(3), 425-444.
  • Moon, H.R. & M. Weidner (2010), “Dynamic Linear Panel Data Regression Models with Interactive Fixed Effects”, Working Paper, University of Southern California.
  • Moon, H.R. & M. Weidner (2012), “Linear Regression for Panel with Unknown Number of Factors as Interactive Fixed Effects”, Working Paper, University of Southern California.
  • Nusair, S.A. (2017), “The J-curve Phenomenon in European Transition Economies: a Nonlinear ARDL Approach”, International Review of Applied Economics, 31(1), 1-27.
  • Pedroni, P. (1999), “Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors”, Oxford Bulletin of Economics and Statistics, 61(1), 653-670.
  • Pedroni, P. (2001), “Purchasing Power Parity tests in Cointegrated Panels”, Review of Economics and Statistics, 83(4), 727-731.
  • Pedroni, P. (2004), “Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests with an Application to the PPP Hypothesis”, Econometric Theory, 20(3), 597-625.
  • Pesaran, M.H. (2007), “A Simple Panel Unit Root Test in the Presence of Cross‐section Dependence”, Journal of Applied Econometrics, 22(2), 265-312.
  • Rose, A.K. & J.L. Yellen (1989), “Is There a J-Curve”, Journal of Monetary Economics, 24, 53-68.
  • Rose, A.K. (1990), “Exchange Rates and Trade Balance: Some Evidence from Developing Countries”, Economic Letters, 34(3), 271-275.
  • Salmon, P. (2003), Decentralization and Supranationalty: The Case of the European Union, <http://www.imf.org/external/pubs/fiscal/salmon.pdf>, 02.10.2003.
  • Song, M. (2013), “Asymptotic Theory for Dynamic Heterogeneous Panels with Cross-sectional Dependence and its Applications”, Working Paper.
  • Swamy, P.A.V.B. (1970), “Efficient Inference in a Random Coefficient Regression Model”, Econometrica: Journal of the Econometric Society, 38(2), 311-323.
  • Wang, C. & C.A. Lin & C. Yang (2012), “Short-run and Long-run Effects of Exchange Rate Change on Trade Balance: Evidence from China and its Trading Partners”, Japan and the World Economy, 24(4), 266-273.
  • Westerlund, J. (2007), “Testing for Error Correction in Panel Data”, Oxford Bulletin of Economics and Statistics, 69(6), 709-748.
  • Yazici, M. & M.A. Klasra (2010), “Import Content of Exports and J-curve Effect”, Applied Economics, 42(6), 769-776.
  • Yılmaz, S. & İ. Özaytürk & G. Oransay (2017), “Testing the Hypothesis of J-curve for Turkish Economy”, Chinese Business Review, 16(9), 419-428.

Türkiye ve Ana Ticaret Partnerleri için J Eğrisinin Geçerliliğinin Analizi: Panel Veri Yaklaşımı Uygulaması

Year 2021, Volume 29, Issue 50, 149 - 168, 31.10.2021
https://doi.org/10.17233/sosyoekonomi.2021.04.08

Abstract

Dış ticaret ekonomik yapılarından veya uyguladıkları ekonomi politikalarından dolayı bazı ülkeler için arzu edilen sonuçlar doğurmaz ve ülkeler bundan dolayı önemli dış ticaret açıkları veya ekonomik krizlerle yüz yüze gelebilir. Bu yüzden araştırmacılar ve politika yapıcılar ülkelerin dış ticaret dengelerinin dinamiklerini analiz ederler. Türkiye’nin kronik cari işlemler açığı en önemli makroekonomik sorunlarından biridir ve geçmişte Türkiye parasının değerini düşürerek dış ticaret açığını azaltmaya çalışmıştır. Bu çalışmada Türkiye ve onun 6 ana dış ticaret partneri için - Rusya, ABD, Almanya, Birleşik Krallık, İtalya ve Çin- J eğrisi hipotezinin geçerliliği sınanmıştır. Kısa dönemi analiz eden test sonuçlarına göre bütün panel istatistiksel olarak anlamsız çıkmıştır.

References

  • Akbostanci, E. (2004), “Dynamics of The Trade Balance the Turkish J-curve”, Emerging Markets Finance and Trade, 40(5), 57-73.
  • Akkaya, O. (2018), “Türkiye ve Türkiye’nin Dış Ticaret Partnerleri Arasındaki İki Yanlı J eğrisi: 1996-2006 Dönemi İncelemesi”, Finans Ekonomi ve Sosyal Araştırmalar Dergisi (FESA), 3(1), 328-338.
  • Ali, S.Z. & S. Anwar (2018), “Anticipated versus Unanticipated Terms of Trade Shocks and the J-Curve Phenomenon”, Journal of International Money and Finance, 81, 1-19.
  • Backus, D.K. & P.J. Kehoe & F.E. Kydland (1994), “Dynamics of Trade Balance and the Terms of Trade: the J-Curve?”, American Economic Review, 84(1), 84-103.
  • Bahmani-Oskooee, M. & A.M. Kutan (2009), “The J-curve in the Emerging Economies of Eastern Europe”, Applied Economics, 41(20), 2523-2532.
  • Bahmani-Oskooee, M. & H. Fariditavana (2015), “Nonlinear ARDL Approach, Asymmetric Effects and the J-curve”, Journal of Economic Studies, 42(3), 9-530.
  • Bahmani-Oskooee, M. & H. Fariditavana (2016), “Nonlinear ARDL Approach and the J-curve Phenomenon”, Open Economies Review, 27(1), 51-70.
  • Bahmani-Oskooee, M. & H. Masoomeh (2012), “German-US Commodity Trade: Is There a J-curve Effect?”, Applied Economics Quarterly, 58(4), 327-353.
  • Bahmani-Oskooee, M. & N. Bose & Y. Zhang (2018), “Asymmetric Cointegration, Nonlinear ARDL, and the J-curve: a Bilateral Analysis of China and its 21 Trading Partners”, Emerging Markets Finance and Trade, 54(13), 3131-3151.
  • Bai, J. (2009), “Panel Data Models with Interactive Fixed Effects”, Econometrica, 77(4), 1229-1279.
  • Bal, H. & M. Demiral (2012), “Reel Döviz Kuru ve Ticaret Dengesi: Türkiye’nin Almanya ile Ticareti Örneği (2002.01-2012.09)”, Ç.Ü. İ.İ.B.F. Dergisi, 16(2),45-64.
  • Brada, J.C. & A.M. Kutan & S. Zhou (1997), “The Exchange Rate and the Balance of Trade: The Turkish Experience”, The Journal of Development Studies, 33(5), 675-692.
  • Breitung, J. & S. Das (2005), “Panel Unit Root Tests Under Cross-Sectional Dependence”, Statistica Neerlandica, 59(4), 414-433.
  • Breusch, T.S. & A.R. Pagan (1980), “The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics”, The Review of Economic Studies, 47(1), 239-253.
  • Chudik, A. & M.H. Pesaran (2015), “Common Correlated Effects Estimation of Heterogeneous Dynamic Panel Data Models with Weakly Exogenous Regressors”, Journal of Econometrics, 188(2), 393-420.
  • Demirden, T. & I. Pastine (1995), “Flexible Exchange Rates and the J-curve: An Alternative Approach”, Economics Letters, 48, 373-377.
  • Dickey, D.A. & W.A. Fuller (1979), “Distribution of the Estimators for Autoregressive Time Series with a Unit Root”, Journal of the American Statistical Association, 74(366a), 427-431.
  • Elmas, Y. & Y. Elmas (2019), “J Eğrisi Etkisinin Eşbütünleşme, Nedensellik ve Wilcoxon İşaret Sıra Testi ile Değerlendirilmesi: Bandırma İlçesi Örneği”, 2. Uluslararası Bandırma ve Çevresi Sempozyumu, 17-19 Eylül 2019, Bandırma, 295-312.
  • Halicioglu, F. (2008), “The Bilateral J-curve: Turkey versus her 13 Trading Partner”, Journal of Asian Economics, 19(3), 236-243.
  • Hepaktan, C.E. (2016), “Yapısal Kırılmalar Altında Türkiye’de J Eğrisinin Analizi”, Celal Bayar Üniversitesi Sosyal Bilimler Dergisi, 14(4), 75-102.
  • Hsing, Y. & B.S. Sergi (2010), “Test of the Bilateral Trade J-curve between the USA and Australia, Canada, New Zealand and The UK”, International Journal of Trade and Global Markets, 3(2), 189-198.
  • Kao, C. (1999), “Spurious Regression and Residual-based Tests for Cointegration in Panel Data”, Journal of Econometrics, 90(1), 1-44.
  • Kösekahyaoğlu, L. & A. Kemeç (2015), “J Eğrisi Analizi ve Türkiye Üzerine Bir Uygulama” Uluslararası İktisadi ve İdari Bilimler Dergisi, 1(2), 1-29.
  • Kösekahyaoğlu, L. & İ. Karataşlı (2018), “Türkiye - AB Dış Ticaretinde J Eğrisi Etkisi : 1994- 2016 Dönemi Üzerine Ampirik Bir İnceleme”, SDÜ İİBF Dergisi, 23(Özel Sayı), 831-844.
  • Lerner, A.P. (1944), The Economics of Control: Principles of Welfare Economics, The Macmillan Company, New York.
  • Magee, S.P. (1973), “Currency Contracts, Pass-through, and Devaluation”, Brookings Papers of Economic Activity, 1973(1), 303-323.
  • Mark, N. & D. Sul (1999), “A Computationally Simple Cointegration Vector Estimator for Panel Data”, Ohio State University Manuscript, <https://www.researchgate.net/publication/2312524_A_Computationally_Simple_Cointegration_Vector_Estimator_for_Panel_Data>, 01.05.2020.
  • Marshall, A. (1923), Money, Credit and Commerce, Macmillan, London.
  • McCoskey, S. & C. Kao (1998), “A Residual-based Test of the Null of Cointegration in Panel Data”, Econometric Reviews, 17(1), 57-84.
  • Moffett, M.H. (1989), “The J-Curve Revisited: An Empirical Examination for the United States”, Journal of International Maney and Finance, 8(3), 425-444.
  • Moon, H.R. & M. Weidner (2010), “Dynamic Linear Panel Data Regression Models with Interactive Fixed Effects”, Working Paper, University of Southern California.
  • Moon, H.R. & M. Weidner (2012), “Linear Regression for Panel with Unknown Number of Factors as Interactive Fixed Effects”, Working Paper, University of Southern California.
  • Nusair, S.A. (2017), “The J-curve Phenomenon in European Transition Economies: a Nonlinear ARDL Approach”, International Review of Applied Economics, 31(1), 1-27.
  • Pedroni, P. (1999), “Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors”, Oxford Bulletin of Economics and Statistics, 61(1), 653-670.
  • Pedroni, P. (2001), “Purchasing Power Parity tests in Cointegrated Panels”, Review of Economics and Statistics, 83(4), 727-731.
  • Pedroni, P. (2004), “Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests with an Application to the PPP Hypothesis”, Econometric Theory, 20(3), 597-625.
  • Pesaran, M.H. (2007), “A Simple Panel Unit Root Test in the Presence of Cross‐section Dependence”, Journal of Applied Econometrics, 22(2), 265-312.
  • Rose, A.K. & J.L. Yellen (1989), “Is There a J-Curve”, Journal of Monetary Economics, 24, 53-68.
  • Rose, A.K. (1990), “Exchange Rates and Trade Balance: Some Evidence from Developing Countries”, Economic Letters, 34(3), 271-275.
  • Salmon, P. (2003), Decentralization and Supranationalty: The Case of the European Union, <http://www.imf.org/external/pubs/fiscal/salmon.pdf>, 02.10.2003.
  • Song, M. (2013), “Asymptotic Theory for Dynamic Heterogeneous Panels with Cross-sectional Dependence and its Applications”, Working Paper.
  • Swamy, P.A.V.B. (1970), “Efficient Inference in a Random Coefficient Regression Model”, Econometrica: Journal of the Econometric Society, 38(2), 311-323.
  • Wang, C. & C.A. Lin & C. Yang (2012), “Short-run and Long-run Effects of Exchange Rate Change on Trade Balance: Evidence from China and its Trading Partners”, Japan and the World Economy, 24(4), 266-273.
  • Westerlund, J. (2007), “Testing for Error Correction in Panel Data”, Oxford Bulletin of Economics and Statistics, 69(6), 709-748.
  • Yazici, M. & M.A. Klasra (2010), “Import Content of Exports and J-curve Effect”, Applied Economics, 42(6), 769-776.
  • Yılmaz, S. & İ. Özaytürk & G. Oransay (2017), “Testing the Hypothesis of J-curve for Turkish Economy”, Chinese Business Review, 16(9), 419-428.

Details

Primary Language English
Subjects Social
Journal Section Articles
Authors

Mehmet Çağrı GÖZEN (Primary Author)
KOCAELİ ÜNİVERSİTESİ, İKTİSADİ VE İDARİ BİLİMLER FAKÜLTESİ, İKTİSAT BÖLÜMÜ, İKTİSAT PR.
0000-0001-6493-9592
Türkiye


Fikriye Ceren BOSTANCI
KOCAELİ ÜNİVERSİTESİ, İKTİSADİ VE İDARİ BİLİMLER FAKÜLTESİ, İKTİSAT BÖLÜMÜ, İKTİSAT PR.
0000-0001-8291-062X
Türkiye

Publication Date October 31, 2021
Published in Issue Year 2021, Volume 29, Issue 50

Cite

Bibtex @research article { sosyoekonomi749477, journal = {Sosyoekonomi}, issn = {1305-5577}, address = {}, publisher = {Sosyoekonomi Society}, year = {2021}, volume = {29}, pages = {149 - 168}, doi = {10.17233/sosyoekonomi.2021.04.08}, title = {Validity of J-Curve for Turkey and Its Main External Trade Partners: An Application of a Panel Data Approach}, key = {cite}, author = {Gözen, Mehmet Çağrı and Bostancı, Fikriye Ceren} }
APA Gözen, M. Ç. & Bostancı, F. C. (2021). Validity of J-Curve for Turkey and Its Main External Trade Partners: An Application of a Panel Data Approach . Sosyoekonomi , 29 (50) , 149-168 . DOI: 10.17233/sosyoekonomi.2021.04.08
MLA Gözen, M. Ç. , Bostancı, F. C. "Validity of J-Curve for Turkey and Its Main External Trade Partners: An Application of a Panel Data Approach" . Sosyoekonomi 29 (2021 ): 149-168 <https://dergipark.org.tr/en/pub/sosyoekonomi/issue/65592/749477>
Chicago Gözen, M. Ç. , Bostancı, F. C. "Validity of J-Curve for Turkey and Its Main External Trade Partners: An Application of a Panel Data Approach". Sosyoekonomi 29 (2021 ): 149-168
RIS TY - JOUR T1 - Validity of J-Curve for Turkey and Its Main External Trade Partners: An Application of a Panel Data Approach AU - Mehmet Çağrı Gözen , Fikriye Ceren Bostancı Y1 - 2021 PY - 2021 N1 - doi: 10.17233/sosyoekonomi.2021.04.08 DO - 10.17233/sosyoekonomi.2021.04.08 T2 - Sosyoekonomi JF - Journal JO - JOR SP - 149 EP - 168 VL - 29 IS - 50 SN - 1305-5577- M3 - doi: 10.17233/sosyoekonomi.2021.04.08 UR - https://doi.org/10.17233/sosyoekonomi.2021.04.08 Y2 - 2021 ER -
EndNote %0 Sosyoekonomi Validity of J-Curve for Turkey and Its Main External Trade Partners: An Application of a Panel Data Approach %A Mehmet Çağrı Gözen , Fikriye Ceren Bostancı %T Validity of J-Curve for Turkey and Its Main External Trade Partners: An Application of a Panel Data Approach %D 2021 %J Sosyoekonomi %P 1305-5577- %V 29 %N 50 %R doi: 10.17233/sosyoekonomi.2021.04.08 %U 10.17233/sosyoekonomi.2021.04.08
ISNAD Gözen, Mehmet Çağrı , Bostancı, Fikriye Ceren . "Validity of J-Curve for Turkey and Its Main External Trade Partners: An Application of a Panel Data Approach". Sosyoekonomi 29 / 50 (October 2021): 149-168 . https://doi.org/10.17233/sosyoekonomi.2021.04.08
AMA Gözen M. Ç. , Bostancı F. C. Validity of J-Curve for Turkey and Its Main External Trade Partners: An Application of a Panel Data Approach. Sosyoekonomi. 2021; 29(50): 149-168.
Vancouver Gözen M. Ç. , Bostancı F. C. Validity of J-Curve for Turkey and Its Main External Trade Partners: An Application of a Panel Data Approach. Sosyoekonomi. 2021; 29(50): 149-168.
IEEE M. Ç. Gözen and F. C. Bostancı , "Validity of J-Curve for Turkey and Its Main External Trade Partners: An Application of a Panel Data Approach", Sosyoekonomi, vol. 29, no. 50, pp. 149-168, Oct. 2021, doi:10.17233/sosyoekonomi.2021.04.08