Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/175907
Authors: 
Oğuş Binatlı, Ayla
Sohrabji, Niloufer
Year of Publication: 
2009
Series/Report no.: 
Working Papers in Economics 09/06
Abstract: 
The Turkish current account has been exploding in the last few years leading to concerns of a crisis. One of the primary factors identified in the rising deficits is the appreciating lira. In addition, income elasticity of exports and imports can also shed light on continuing trade deficits. In this paper we analyze exchange rate and income elasticity of Turkish imports and exports. We find a significant gap between domestic and foreign income elasticities (for exports and imports respectively) which points to a threat of growing trade deficits. In addition we also find that the exchange rate elasticity is negative for both Turkish exports and imports. This indicates that depreciation of the Turkish lira will have a negative effect on both imports and exports.
Subjects: 
Cointegration
current account deficits
exchange rate and income elasticity
Turkey
JEL: 
F32
F41
Document Type: 
Working Paper
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