Effects of exchange rate uncertainty on Western Mediterranean Region exports

There is a large literatüre examining the effects of Exchange rate volatility on exports. However, no consensus has been reached in the literatüre regarding the consequences of this effect. Different results were obtained in empirical studies. This research aims to determine the effects of the real effective exchange rate on the exports of the Western Mediterranean Region. For the export data of the provinces of the Western Mediterranean Region, foreign trade statistics obtained from the Turkish Statistical Institute datebase were used. Data regarding the real effective exchange rate (2003=100) series were include in the analysis of the research by electronic data distribution system of the Central Bank of the Republic of Turkey. In the study, montly data between the first month of 2002 and the twelfth month of 2022 was used. Since the real effective exchange rate and the Western Mediterranean Region exports are integrated at the same level, the long-term relationship between the variables can be determined by the Engle-Granger cointegration analysis; The short-term relationship was analyzed with the error correction model. As a result of the Engle – Granger cointegration analysis, it was concluded that there was long-term cointegration between the variables. In the error correction model made by including the one-period lagged residual series into the model, it was concluded that the imbalance that occurred in the short term would converge to the 60% equilibrium value after a period.