Exchange, inflation and interest rates effects on foreign trade Turkish example: (1985-2005)

Foreign trade encompasses one country?s trade in goods and services withother countries. For a country to have a sound economical structure it must deal intrade. The expansion of international trade has resulted in a world-sized commercewhich is enlarging daily.Exchange rates with inflation and interest rates effects on foreign trade for theperiod of 1985-2005 were examined. The Eviews program?s econometric analysiswas used. Datum was taken by year.Study results were achieved. The prime finding is that foreign trade isaffected by interest rates, inflation rates and `real? exchange rates for both short andlong term. The secondary finding was determined for short-term effects by usingGranger causation testing.The findings reflect two conclusions; the long-term conclusion and the short-term causation conclusion. In this way, within the constraints of the predetermineddatum, foreign trade is clearly appropriate for the Turkish economy, even withindependent causation factors.Keywords : foreign trade, interest rate, inflation rate, exchange rates, causation