The macroeconomy and Turkish agricultural trade balance with the EU countries: Panel ARDL analysis

Abstract

The purpose of this paper is to investigate the factors determining fluctuations in Turkish agricultural trade balance with the EU countries within the context of trade balance theories. For this purpose, we examine both the short and long-run impacts of the real exchange rate, the domestic (foreign) income, and the domestic (foreign) money supply on the agricultural trade balance between Turkey and her fourteen trading partners in the EU. Our study covers the period from 1987q1 to 2005q4, and employs the Pooled Mean Group estimator. The results show that (i) the monetary and real variables have significant effects on the Turkish agricultural trade balance in both the short and long-run and (ii) the J-curve effect is not observable in Turkish agricultural trade with the EU countries. Findings provide some clues to better understanding of the recent dynamics of Turkish agricultural trade balance with the EU countries. © International Economic Society.