Theoretical and Applied Economics
No. 2 / 2017 (611), Summer
The effects of real exchange rates and income on the trade balance: A second generation panel data analysis for transition economies and Turkey
Uludag University Karacabey Vocational School, Turkey
Abstract. In this study, effects of real exchange rate, domestic and foreign income on the external trade balance has been analysed in the framework of the extended Marshall-Lerner condition and J-curve phenomenon using 1995:Q1-2015:Q4 period data for fourteen transition economy and Turkey by means of panel cointegration analysis with multiple structural breaks under crosssectional dependency. Cross-sectional dependence has been analysed with the bias-adjusted cross-section dependence Lagrange multiplier developed by Pesaran et al. (2008) and cross-section dependency has been observed among the countries. Stationary of the series has been tested with the panel unit root test with multiple structural breaks developed by Carrion-i-Silvestre et al. (2005) and it has been found that series are non-stationary in level. The existence of a cointegration relationship between series has been tested with the panel cointegration test with multiple structural breaks developed by Basher and Westerlund (2009) and a cointegration relationship has been observed between the series. Cointegration coefficients have been estimated with the Pesaran (2006) Common Correlated Effects method. According to the analysis result we found evidence that support the extended Marshall- Lerner condition in Belarus, Bulgaria, Croatia, Hungary, Latvia, Poland, Romania, Russia, Slovakia, Slovenia and Turkey. Furthermore, the J-curve phenomenon is valid in Belarus, Romania and Slovenia.
Contents
The role of fiscal policy in the financial crisis. Challenges and solutions
Using the input-output model in macroeconomic analysis and forecasting studies
Panel causality analysis between exchange rates and stock indexes for fragile five
Modeling of stock indices with HMM-SV models
The impact of private sector credit on income inequalities in European Union (15 member states)
Economic freedom, economic growth and international tourism for post-communist (transition) countries: A panel causality analysis
The main correlations between the monetary-banking indicators
Impact of governance on budget deficit in developing countries
Private equity market developments in central and Eastern Europe
Public-Private Partnerships for clean energy investment in developing and emerging economies: Allocating risks and sharing rewards
Science is measurement, yet not all sciences can be evaluated using the same measurement
The effects of real exchange rates and income on the trade balance: A second generation panel data analysis for transition economies and Turkey
Child policy changes and estimation of income distribution effects
An enquiry into the dynamics of real oil prices: A state space approach
Wage inequalities in Romania under successive adjustments in minimum wage levels
An examination of bilateral J-curve: Evidence from Turkey and her 20 major trading partners
Do military expenditures converge in NATO countries? Linear and nonlinear unit root test evidence
Impact of GDP and tax revenue on health care financing: An empirical investigation from Indian states
The relation between foreign direct investments and some economic indicators. The case of Romanian economy
Economic freedom and foreign direct investment in South Asian countries
New software for identification and evaluation of environmental and waste management in the companies
An analysis of the effect of monetary policy changes on macroeconomic factors
The costs of Brexit for UK economy