The impact of real exchange rate volatility on the export of Turkish electrical appliances

The impact of real exchange rate volatility on the export of Turkish electrical appliances

 

Rahmi Cetin, Etem Karakaya

 

Keywords: real exchange rate volatility, electrical exports, cointegration, Turkey

 

Summary: This paper examines the impact of real exchange rate volatility on the demand for electrical exports, which is the second largest sub-sector of machinery in Turkey, by employing multivariate cointegration and error correction methods. The model was estimated for two-digit electrical exports (SITC 77), using quarterly data for the period 1995-2010. Our estimation results suggest that real exchange rate exerts a negative and significant impact on electrical exports both in the long and short term, while its volatility has only a positive and significant impact in the long run. In addition, the results of the long-term export model indicate that foreign income also has a positive and significant impact on Turkish electrical exports.

 

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