Özet:

Abstract J-curve which explains the possible effects of exchange rates on foreign trade states that the depreciation of national currency worsens the balance of trade in the short-term and has an improvement effect in the long-term. The success of devaluation in affecting the trade balance positively depends on the fulfillment of Marshall-Lerner condition. Accordingly, when the sum of foreign demand elasticity of exported goods and domestic demand elasticity of imported goods is equal to or greater than one, the rise in the RER increases the countryˈs foreign exchange earnings and improves the balance of trade. In our study, it is investigated whether the J-curve hypothesis is valid or not in Turkey. For this purpose, the Toda Yamamoto Causality Test and Hatemi-J (2012) Asymmetric Causality Test are applied using the 1996-2019 monthly data. The Toda Yamamoto Causality Test results manifest that there is a unidirectional causality relationship from the real exchange rate to import. On the other hand, the results of the Hatemi-J (2012) Asymmetric Causality Test put forth that shocks in the real exchange rate do not affect export, but decrease import. Thus, the J-curve hypothesis has been determined to be invalid for Turkey.

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