Abstract:

The Industrial Revolution and globalization have rapidly transformed the world into a single market. This situation has made foreign trade an important economic activity for countries. Thus, foreign trade gaining great importance for countries has also increased the global demand for foreign currency. The exchange rate interacting with foreign trade affects the inflation figures of countries as well. In this direction, the purpose of this study is to examine whether there is a relationship among exchange rate, inflation, export, and import series by using an econometric method for Turkey's monthly between 2004:M1-2019:M12. Firstly, the theoretical framework and literature review were discussed in the study, then econometric analysis was performed. In the econometric analysis, first, the Augmented Dickey-Fuller unit root test was applied to the series, and it was observed that the series were stationary at the first difference. Then, the Johansen cointegration test was applied to the series and it was determined that the series were cointegrated. At the last stage of the analysis, the Granger causality test was conducted and as a result of this test, it was found that there was a bidirectional causality relationship between Turkey's exports and imports between 2004-2019. In addition, it has been observed that there is a one-way causality relationship from exchange rate to inflation and exports. Ultimately, in the study,it is concluded that exchange rate, inflation, export, and import figures affect each other in the long run in Turkey.

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