THE EFFECT OF EXCHANGE RATE UNCERTAINTY ON EXPORT: THE CASE OF OSMANIYE
DÖVİZ KURU BELİRSİZLİĞİNİN İHRACAT ÜZERİNE ETKİSİ: OSMANİYE İLİ ÖRNEĞİ

Author : Banu TANRIÖVER -- Burhan BİÇER - Esma ERDOĞAN
Number of pages : 105-118

Abstract

The most important factor which effects the country’s export is a real exchange rate. The increase in the real exchange rate makes domestic products cheaper for foreigners and increases export. With the collapse of Bretton Woods system, it was adopted to flexible exchange rate which exchange rate is determined by supply and demand in the market, instead of fixed exchange rate. Increased uncertainty in flexible exchange rate system led to argument that export was effected negative. To reveal the effects of the exchange rate uncertainty on export has highly important for policy makers. In this study, it is aimed to clarify the effects of exchange rate uncertainty on Osmaniye export. For this purpose, the existence of the possible relationship between export and exchange rate uncertainty was tested by using exchange rate uncertainty and Osmaniye export data for the period of 2004:01-2016:02. In this regard, Hodrick-Prescott (1980) decomposition analysis was preferred in the study in order to determine the exchange rate uncertainty with the help of exchange rate volatility. With the purpose of determining the existence of a possible relationship between two variables, ARDL bound test developed by Pesaran et al. (2001), was applied. In the result of findings, it is accepted that there is a long run relationship between relevant two variables. But, the findings acquired from the ARDL model, which is established to find out the direction and magnitude of the long run relationship showed that the long run relationship coefficient isn’t significant. Since the adoption of flexible exchange rate regime, rising of Osmaniye export is believed to arise that manufacturers turn to foreign sales in the face of shrinking domestic demand by 2008 economic crisis. In addition, the foreign trade partners of Osmaniye, composed of the least affected countries from the economic crisis in 2008, can also be given as to why the increase occurred in the export figure.

Keywords

Exchange Rate Uncertainty, Exchage Rate Volatility, Export, Osmaniye Economy, ARDL

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