Short Run Import Dynamics in Turkey

Short Run Import Dynamics in Turkey

Title : Short Run Import Dynamics in Turkey
Number : 12/25
Author(s) : Altan Aldan, İhsan Bozok, Mahmut Günay
Language : English
Date : August 2012
Abstract : We study the short-run dynamics of Turkish imports between 2003 and 2011 by applying Kalman filter to obtain time-varying elasticities for income and exchange rate. In addition to total imports excluding energy, we use data based on broad economic activities in order to allow sectoral heterogeneity in income and exchange rate elasticities. Our results indicate that income is more important (compared to the exchange rate) in determining import growth in most of the sectors, though there is heterogeneity among sectoral responses. Moreover, we find that elasticities (especially for income) change over time, and the change is more prominent after the 2008 financial crisis. Finally, we find evidence of aggregation bias in income elasticity estimates, which increase in recent years.
Keywords : Import demand, Kalman filter, Aggregation bias
JEL Codes : C13; C51; F17

Short Run Import Dynamics in Turkey
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