Quality & Quantity

, Volume 42, Issue 1, pp 45–52 | Cite as

The Exchange Rate and the Trade Balances of Turkish Agriculture, Manufacturing and Mining

  • Mehmet Yazici


This paper investigates and compares the response to the exchange rate changes of trade balances of three Turkish sectors; agriculture, manufacturing and mining. The impact on trade balance of exchange rate changes is examined using the trade balance model employed in Bahmani-Oskooee [1985, Review of Economics and Statistics 67: 500]. Analysis is conducted based on the quarterly data from 1986: I to 1998: III. It is observed that in response to domestic currency depreciation trade balance of each of all three sectors first improves, then deteriorates and then improves again. Despite exhibiting similar pattern of reaction to the exchange rate change in the short run, long-run or overall response of trade balance differs across the sectors; while trade balances of both manufacturing and mining improve in the long run, agricultural trade balance worsens as a result of domestic-currency depreciation.


exchange rate J-curve polynomial distributed lag model sectors trade balance 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Akbostanci E. (2004). Dynamics of trade balance: the Turkish J-curve. Emerging Markets Finance and Trade 40: 57–73Google Scholar
  2. Almon S. (1965). The distributed lag between capital appropriations and expenditures. Econometrica 33: 178–196CrossRefGoogle Scholar
  3. Bahmani-Oskooee M. (1985). Devaluation and the J-curve: some evidence from LDCs. Review of Economics and Statistics 67: 500–504CrossRefGoogle Scholar
  4. Bahmani-Oskooee M. (1989). Devaluation and the J-curve: some evidence from LDCs: errata. Review of Economics and Statistics 71: 553–554CrossRefGoogle Scholar
  5. Bahmani-Oskooee M., Malixi M. (1992). More evidence on the J-curve from LDCs. Journal of Policy Modeling 14: 641–653CrossRefGoogle Scholar
  6. Brada J.C., Kutan A.M., Zhou S. (1997). The exchange rate and the balance of trade: the Turkish experience. Journal of Development Studies 33: 675–692CrossRefGoogle Scholar
  7. Carter C.A., Pick D.H. (1989). The J-curve effect and the US agricultural trade policy. American Journal of Agricultural Economics 71: 712–720CrossRefGoogle Scholar
  8. Dornbusch R., Krugman P. (1976). Flexible exchange rates in the short run. Brookings Paper on Economic Activity 7: 537–575CrossRefGoogle Scholar
  9. Doroodian K., Jung C., Boyd R. (1999). The J-curve effect and US agricultural and industrial trade. Applied Economics 31: 687–690CrossRefGoogle Scholar
  10. Himarios D. (1989). Do devaluation improve the trade balance? The evidence revisited. Economic Inquiry 27: 143–168CrossRefGoogle Scholar
  11. Junz H.B., Rhomberg R.R. (1973). Price competitiveness in export trade among industrial countries. American Economic Review 63: 412–418Google Scholar
  12. Magee S.P. (1973). Currency contracts, pass-through, and devaluation. Brookings Papers on Economic Activity 1: 303–325CrossRefGoogle Scholar
  13. Meade, E. E. (1988). Exchange rates, adjustment, and the J-curve. Federal Reserve Bulletin, pp. 633–644.Google Scholar
  14. Miles M.A. (1979). The effects of devaluation on the trade balance and the balance of payments: some new results. Journal of Political Economy 87: 600–620CrossRefGoogle Scholar
  15. Rose A.K. (1990). Exchange rates and trade balance: some evidence from developing countries. Economics Letters 34: 271–275CrossRefGoogle Scholar
  16. Rose A.K., Yellen J.L. (1989). Is there a J-curve. Journal of Monetary Economics 24: 53–68CrossRefGoogle Scholar
  17. Singh T. (2002). India’s trade balance: the role of income and exchange rates. Journal of Policy 24: 437–452Google Scholar
  18. Wilson P., Tat K.C. (2000). Exchange rates and trade balance: the case of Singapore 1970 to 1996. Journal of Asian Economics 12: 47–63CrossRefGoogle Scholar

Copyright information

© Springer Science + Business Media B.V. 2006

Authors and Affiliations

  1. 1.Department of International TradeÇankaya UniversityBalgat AnkaraTurkey

Personalised recommendations