Exchange rate fluctuations, volatility and exports: The intensive margin effect for Turkish firms*

Dinçer N. N., Shingal A., Tekin Koru A.

JOURNAL OF INTERNATIONAL TRADE & ECONOMIC DEVELOPMENT, vol.31, no.3, pp.450-473, 2022 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 31 Issue: 3
  • Publication Date: 2022
  • Doi Number: 10.1080/09638199.2021.1984548
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, Academic Search Premier, IBZ Online, International Bibliography of Social Sciences, ABI/INFORM, Business Source Elite, Business Source Premier, EconLit, Geobase
  • Page Numbers: pp.450-473
  • Keywords: International trade, Exchange rates, Global value chains, Exchange rate pass-through, Turkey, INTERNATIONAL-TRADE, ENTRY, LEVEL, PERFORMANCE, IMPACT, REACT
  • TED University Affiliated: Yes


We estimate an augmented gravity model using a firm-level database on Turkish firms to revisit the trade-exchange rate relationship over 2003-2015 at the intensive export margin. Besides several additional layers of analysis made possible by unique attributes of our firm-level database, we also examine exchange rate effects separately for firms engaged in manufacturing and services-intensive activities, which differentiates us from existing literature. A depreciation of the Lira is found to be associated with an increase in the quantity of Turkish exports, irrespective of firm ownership or size, though the effect is found to be muted for manufacturing firms in the sample that are more reliant on imported intermediates. Meanwhile, exchange rate volatility is found to be adversely associated with firm-level exports, especially for the sample of services-intensive and foreign-owned firms, irrespective of whether the Lira appreciated or depreciated. Finally, while the results display significant heterogeneity across sectors, at the regional level, they are driven by the location of production/export hubs in Turkey, namely Istanbul in Marmara, Ankara in Central Anatolia and Izmir in Aegean.