Türkiye’s services trade balance and the J-curve effect
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The purpose of this study is to determine the J-curve effect on Türkiye’s services trade in the short and long run and the impact of fluctuations in exchange rates changes based on the direction of currency movement. Using quarterly data from ten Turkish service industries, we evaluate the asymmetric J-curve theory. Employing the linear autoregressive distributed lag (ARDL) technique, we tested for a symmetric J-curve and discovered evidence for the inverse J-curve in one industry and the J- curve in three. However, we discovered support for the asymmetric J- curve in two industries and the asymmetric inverse J-curve in one industry when we investigated the asymmetric J-curve using the nonlinear ARDL technique. The change in supported cases illustrates how the Turkish lira's real effective exchange rate adjusts nonlinearly.
Abstract
The purpose of this study is to determine the J-curve effect on Türkiye’s services trade in the short and long run and the impact of fluctuations in exchange rates changes based on the direction of currency movement. Using quarterly data from ten Turkish service industries, we evaluate the asymmetric J-curve theory. Employing the linear autoregressive distributed lag (ARDL) technique, we tested for a symmetric J-curve and discovered evidence for the inverse J-curve in one industry and the J- curve in three. However, we discovered support for the asymmetric J- curve in two industries and the asymmetric inverse J-curve in one industry when we investigated the asymmetric J-curve using the nonlinear ARDL technique. The change in supported cases illustrates how the Turkish lira's real effective exchange rate adjusts nonlinearly.