Asymmetric Effects of Real Exchange Rate on Turkey's Imports: Threshold Value Regression Model

Determinants of imports are one of the most discussed topics in the foreign trade literature. This study explores the asymmetric relationship between the real exchange rate and imports for Turkey example. The paper employs monthly data spanning from 2013:01 to 2023:06, estimating classical least square estimation and Threshold Regression Models, subsequently comparing their outcomes. The findings highlighted that the relations between imports and real exchange rate are asymmetric. According to the least square estimation model, it was noted that the real exchange rate had a negative impact on imports, aligning with anticipated outcomes. In the threshold regression model, it was seen that movements in the real exchange rate positively affected imports in the model below the threshold, while exerting a negative effect in the model above the threshold. This finding was interpreted as increasing imports by buying the expectation that the exchange rate increases, which are below the internalizable level, may increase further. It is considered essential for policymakers to take into account asymmetric relationships when analyzing the relationships between imports and the exchange rate.