Elasticity of export to the real exchange rate: Product level analysis for Turkey and selected countries

Ensuring balance in foreign trade has always been seen as an economic goal in all countries of the world, including Turkey. Those who determine the policies to be implemented frequently resort to exchange rate policies to reduce the current account deficit. For this reason, the effect of exchange rate on exports and imports has become a subject that is discussed a lot in the literature. In this study, data belonging to the six- digit HS classification were used and it was aimed to calculate the elasticity of the export outputs of the real exchange rate for 19 countries including Turkey. The results of the analysis show that while the price effect is quite low in response to the changes in the exchange rate, the quantity effect is more intense. However, the rates of this effect vary from sector to sector and country groups. According to our results, the policies to be implemented in the exchange rate should be chosen and implemented very carefully in order not to be exposed to unexpected situations.