Free outside influence on current balance of trade policy: An application on Turkey

The current account deficit problem has become an important problem for both developed and developing countries. In particular, in developing countries such as Turkey, in order to ensure economic stability, the current account deficit should be controlled and the current balance should be maintained. The aim of this study is to investigate the effect of free foreign trade policies on current account balance in the context of economic developments between 1980-2016. During the study, the economic globalization index, the effect of gross domestic product and exchange rates on the current balance is analyzed by using annual data of 1980-2016 period. First of all, ADF and PP unit root tests were applied to stabilize the variables. Then, the relationship between the variables was examined with the help of Johansen Cointegration test and Granger Causality test. As a result of the study, it was determined that there is a cointegration relationship between the variables and it is determined that economic globalization index and exchange rate are the one-way cause of the current balance. Keywords: Current balance, Economic Globalization Index, Exchange Rate, Gross Domestic Product.