Econometric analysis of foreign trade between Turkey and Italy

The aim of this study is to estimate the export and import demand functions of Turkey to Italy after Custom Union with cointegration analysis. In the first section, the content of the thesis is summarized. In the second section, foreign trade theories are summarized. In the third section, the literature review is summarized. In the fourth section of the thesis, econometrics theories are summarized. In the last section, econometric analysis is performed. Income and relative prices are taken as the determinants of import and export function. İmport and export functions are examined between the periods of 1996-2015 on the general model. Long run relationship is obtained by Engle- Granger and Johansen Maximum Likelihood estimations. This means that the ratio of GDP in income is high and import is very sensitive to changes in relative prices.