The effect of real exchange rate uncertainty on Turkey’s foreign trade: new evidences from SVAR model

ABSTRACT

In this study, the relationship between exchange rate uncertainty and Turkey’s foreign trade performance is analyzed using monthly data from 2002:01 to 2017:12 via Structural VAR (SVAR) model. The empirical results indicate that domestic income and import have more impact on Turkey’s export. Moreover, domestic income, exchange rate and exchange rate uncertainty are effective on Turkey’s import. These results imply that Turkey’s export is dependent on imported inputs more than the exchange rate and exchange rate uncertainties.

KEYWORDS:

• SVAR model
• exchange rate Volatility
• macroeconomic policy

Disclosure statement

No potential conflict of interest was reported by the authors.