Turkish Trade in Eight Service Categories and the Role of Exchange Rate

Bahmani-Oskooee, Mohsen and Halicioglu, Ferda (2025): Turkish Trade in Eight Service Categories and the Role of Exchange Rate.

Abstract

A new strand of literature in international economics is now in the early stages of development, i.e., the impact of exchange rate changes on service trade. We add to this literature by considering the link between the Turkish lira's real effective exchange rate and its trade in services. Since nonlinear adjustment of the exchange rate has proven to yield more significant outcomes relative to linear adjustment, we estimate a nonlinear model (assuming the effects are asymmetric) in addition to a linear model (which assumes the effects are symmetric). When we first estimated the models using Turkish aggregate trade in services, we could only find some short-run effects. However, we disaggregated the data into eight service categories to reduce aggregation bias. We then found short-run significant effects in all eight service industries. Short-run effects lasted into long-run effects in six industries. The unaffected industries were construction and transport.

• Item Type: MPRA Paper
• Language: English
• Keywords: Trade in Services, Real Effective Exchange Rate, Asymmetric Analysis, Turkey
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; G - Financial Economics > G2 - Financial Institutions and Services > G20 - General

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