Exchange-Rate Volatility's Impact on Turkey's Exports: An Empirical Analyze for 1992-2010

AbstractTurkey has gone a process of striking economic growth owing to policies of stability pursued in the aftermath of economic crises in 1990s and early 2000s. The Turkish national economy has maintained a 5 pct growth rate on average in the last decade by reliance on export-based development policies implemented since 1980s. The rise in consumption expenditures in domestic markets, as well as the constructions, which have limited impact upon the size of the foreign trade significantly influence the growth rate. The size of foreign trade has grown since the 2000s significantly and reached to 299 billion USD over this period. The increase in the size of foreign trade has positive impact upon exports; the amount of exports has dramatically increased from 25 billion USD to 113 billion USD in 2010 despite global economic crisis. On the other hand, despite the dramatic increase in the amount of exports, Turkey has also relied on imports; the rising amount of imports led to a problem of current account deficit in the economy. The exchange rate volatility is one of the factors that affect exports most. The exchange rate volatility and financial stability can affect positively or negatively the exports of the developing countries in the short or long terms. In this study, the monthly Currency sale rates (DS) and Export (X) series are considered to investigate whether the X and DS series were affected by each other in the turning points detected by Unit root test with one structural break (Zivot-Andrews) and Unit root test with two structural breaks (Lee-Strazicich). The test results reveal that exports are not affected by structural turnings in the sale of currencies; in other words, the results show that export is not sensitive to the structural breaks and changes in currency rates