Yağmur KESKİN & Ahmet ŞENGÖNÜL / ASYMMETRIC J CURVE RELATION BETWEEN TÜRKİYE AND HER EUROPEAN TRADE PARTNERS: A NARDL METHOD Yağmur KESKİN Ahmet ŞENGÖNÜL

Abstract
This research delves into the asymmetrical impacts, both short and long term, of the real strengthening or weakening of Türkiye’s currency against that of the 28 European Union member countries, on its bilateral trade balance. The study aims to uncover potential asymmetries in the relationship between Türkiye’s currency depreciation and its trade balance with the EU 28 countries, while also considering the possibility of a J-curve effect. By utilizing the Non-Linear Autoregressive Distributed Lag Model (NARDL) introduced by Shin et al. (2013), which accounts for asymmetric relationships, the analysis examines whether Türkiye’s trade balance with her EU 28 partners reacts differently to currency appreciation and depreciation. The findings from the non-linear ARDL analysis conducted in this study lend support to the hypothesis of an asymmetrical relationship, both in the short and long term, between the real appreciation of foreign exchange rates and Türkiye’s bilateral trade balance with the EU 28 countries, potentially indicating the presence of a J-curve effect.

Keywords
Devaluation, Foreign Trade Balance, J-Curve, NARDL.

JEL Classification
F32, C58, G15.

How to cite this article: Keskin, Y., & Şengönül, A. (2024). Asymmetric j curve relatıon between Türkiye and her European trade partners: a nardl method. International Journal of Insurance and Finance, 4(1), 49-59. https://doi.org/10.52898/ijif.2023.5