Reel Effective Exchange Rate Volatilities Impact on Tourism Sector in Turkey: An Empirical Analysis of 2003-2014

AbstractThere have been positive changes in the macro indicators of the economy in Turkey over the last decade. The foreign trade volume increased remarkably whereas serious progress has also been observed in many sectors. The volatility in the Turkish currency was relatively reduced in the aftermath to the regulations in the finance sector. Tourism is one of the sectors in Turkey that is open to international markets and attracts foreign currency. The contribution and added value of the tourism sector to the national economy has been growing in recent years. The stability in the domestic currency also positively affected tourism sector. To this end, the revenues in this sector have also increased. This study analyses the dynamics of the macro performance in Turkish economy over the last decade and empirically reviews the developments in tourism sector as well as the reflections in the monetary policies and the real effective exchange rate (REER) volatility. Additionally, empirically tests the relationship between the tourism sector revenues and the REER in the period between 2002 and 2014