The relationship between current account balance - real exchange rate: The instance of Turkey

In this study, the relationships between current account and the real exchange rate is analyzed. In the empirical study conducted after giving the theoretical bases of the relations and the analysis method, the effects of changes in oil prices, real exchange rate and gross domestic product on current account of Turkey was analyzed for the period of 1998:01–2016:12. The ARDL model was used to analyze the relationships. In addition, Lee-Strazicich (2003)'s minimum Lagrange multiplier unit root test with two structural breaks is used to determine the stationary of the series. According to the result of the ARDL model, it's found that the real exchange rate, price of oil and GDP have significant influences on the current account balance.