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Current Approaches in Social Sciences

Edited By Rasim Yilmaz, Günther Löschnigg, Hasan Arslan and Mehmet Ali Icbay

Current Approaches in Social Sciences is a collection of research papers on a wide range of social issues written by researchers from several different institutions. The book will appeal to educators, researchers, social students and teachers of all subjects and of all levels, who wish to develop personally and professionally. It will also be useful to all those who interact, one way or another, with both students and teachers in a social context.

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The Relationship between Exchange Rate and Foreign Trade in Turkey:A Cointegration Analysis (Aslı Yenipazarlı] [Arif Aral])

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Aslı Yenipazarlı1 & Arif Aral Adnan Menderes University, Turkey The Relationship between Exchange Rate and Foreign Trade in Turkey: A Cointegration Analysis Abstract Since 1980, Turkish Economy adopted liberal trade policies. With this change, the volume of exports and import increased rapidly. The necessity for changing trade policy instruments brought about new arrangements. In this study, firstly the development of exchange rate policies and trade policies in Turkey are reviewed. Then, trade performance in Turkey has been analyzed using monthly data on export over import ratio (X/M) and average monthly exchang rate (US Dollar) over the period of 1991–2013. Empirical analysis consists of time series data and Johansen Cointegration Analysis. We argue that there is a long term cointegration relationship between foreign trade and exchange rate. Keywords: Exchange Rate, Foreign Trade, Cointegration, Export over Import Ratio. The Relationship Between Exchange Rate and Foreign Trade In Turkey: A Cointegration Analysis In 1980, “Decisions of January 24th” were introduced to get rid of the foreign exchange bottleneck, to prevent inflation, and to provide foreign trade balance. Within this context, instead of overvaluation of Turkish Lira (TL), real valuation of TL was aimed. TL was devalued against the US dollar to increase the competi- tiveness of the export activities. High interest rates, free exchange rate policies, and export oriented trade are considered the most important results of “Decisions of January 24th”. As a result of the globalisation in the economy, the crisis spread to Europe and then to Turkey due to its...

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