Econometric modelling of import demand and export supply in Turkey

Abstract

In this thesis, I estimate the export supply and import demand equations for Turkey using quarterly data over the period 1989-2000. Unlike the previous studies done for Turkey, in this study the sub-items of the total import demand, namely, intermediate, capital and consumption goods import demand equations are estimated. In empirical analysis, first the cointegration is tested by using two different approaches: Engle-Granger (1987) and Johansen (1991) approach. After finding long-run relationships, error correction models are specified and estimated for export supply and import demand equations respectively. The main conclusion that emerges from empirical results is that foreign trade developments in Turkey are highly dependent on the economic activity and the effects of exchange rate policy on imports and exports appear to be fairly limited.