AN APPLIED TRADE BALANCE MODELLING FOR SOME MACROECONOMIC VARIABLES THAT HAVE AN IMPACT ON FOREIGN TRADE: ARDL BOUNDS TESTING APPROACH

Abstract

In this paper, a theory based trade balance model is tried to be estimated upon the Turkish economy. Our findings considering 2003Q1 – 2018Q2 sample period indicates that trade balance charactesristics can be obtained in a stationary form in line with our expectations. Increases in domestic income worsen the trade balance while increases in foreign income improve it. In addition, the developments occurring in real exchange have significant effects on the trade balance, and in this context, the real appreciation of the national currency against foreign currencies in the long term deteriorated the trade balance. 34% of the deviations from the long run trade balance relationship have been observed to disappear in one observation period.