What impact does exchange rate volatility have on world turkey trade flows?

Abstract

A gravity model was used to determine the impact of exchange rate volatility on turkey trade flows. Previous analyses of aggregate agricultural sectors or products have assumed the effect of exchange rate volatility is uniform, that is, it impacts the individual components of the aggregates in the same way. This is highly unlikely, given the differences in biological and marketing factors across commodities and sectors. In order to address this issue, we examined how exchange rate volatility affects international turkey trade rather than the more commonly analysed ‘poultry’ trade. Findings revealed that the effects of short- and long-run exchange rate volatility on bilateral turkey trade are positive and statistically significant. Increasing distance between importing and exporting countries has a negative effect on turkey trade flows, while being a member of NAFTA and EU-27 has positive impacts on those flows.

Keywords::

• turkey
• exchange rate volatility
• gravity model
• international trade

Notes

Disclaimer: The views expressed here are those of the author, and may not be attributed to the Economic Research Service or the U.S. Department of Agriculture

¹ An internet search with the term ‘Turkish Pigeon’ will produce several to many ‘hits’ for Turkish nationals overseas who laud the value of their pigeons and of pigeon keeping but as many of these are likely to be ephemeral they are not listed here.