Exchange rate uncertainty and agricultural trade: panel cointegration analysis for Turkey

Abstract This study addresses the impact of exchange rate levels and uncertainty on bilateral agricultural trade between Turkey and 20 major trading partners, using panel cointegration analysis for annual data covering the period 1980–2005. Results show that (i) the exchange rate level is less robustly linked to trade volumes than is exchange rate uncertainty, (ii) exchange rate uncertainty is associated with smaller trade volumes in both directions, but more so for imports than for exports, and (iii) income growth in Turkey is associated with greater imports, just as income growth among trading partners is associated with greater exports. These findings provide some clues for understanding the recent patterns of Turkish agricultural trade, and suggest directions for future research.