The Effect of Terms of Trade on Balance of Trade: Applicatıon of Harberger- Laursen-Metzler Hypothesis for Turkey

• Main Authors: İsmail Küçükaksoy, İsmail Çiftçi
• Format: Article
• Language: Turkish
• Published: Usak University 2014-07-01
• Series: Optimum Ekonomi ve Yönetim Bilimleri Dergisi
• Subjects: Terms of trade; Harberger-Laursen-Metzler Hypothesis; S-Curve; Zivot-Andrews approach; VAR (Vector Autoregressive) model
• Online Access: http://dergipark.gov.tr/download/article-file/202164
• ISSN: 2148-4228; 2148-4228

Harberger-Laursen-Metzler Hypothesis is known as in terms of trade shocks affect the balance of trade in the same direction. This paper aims to investigate validity of Harberger-Laursen-Metzler (HLM) Hypothesis for Turkey using monthly data in period from 2003:01 to 2014:04. Also a similar effect to the hypothesis the point in question in the literature is known as S Curve. The method used to determine relationships between variables are Johansen cointegration test, Granger causality test and VAR model. The findings obtained in this study are listed as follows: a) According to the method of Johansen cointegration there is long run relationship between variables; b) According to Granger causality results the balance of trade cause terms of trade; c) According to the results of the VAR model, response to a shock in terms of trade, initially worsened the balance of trade, after nine months improvements are seen, this situation prove validity of the HLM hypothesis and the S Curve hypothesis.