Abstract:

The S-curve is used to describe the dynamic relation between terms of trade and trade balance. As a result of previous works the S-curve relation was obtained for some developed and developing countries within the framework of their trade with the rest of the world. On the other hand for some countries this relationship is weak or there is no relationship. The possibility of “aggregation bias” problem of the previous works leads researchers to a make the same analysis at bilateral and industry level. In our work this relationship is investigated for Turkey at aggregate level with the rest of the world, with the developing and developed countries and at the bilateral level with the 20 important trade partners for the 2003Q1-2012Q4 period. The results of our analysis for Turkey show that there is a weak S-curve relation with the rest of the world and with the developing countries. On the other hand the relation is strong with the developed countries. At the bilateral level there is a strong S-curve relation in 14 out of 20 cases

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