An Empirical Analysis on the Export/Import Coverage Ratio in Turkey

Using Turkey’s bilateral trade data with its 91 major trading partners from the 1994-2012 period, this paper investigates the sensitivity of the Turkish export/import coverage ratio to trading partner exchange rate and Gross Domestic Product using panel regressions. Empirical findings indicate that a 1 percent growth in trading partners’ Gross Domestic Product is associated with a 1.6-1.7 percent increase in the coverage ratio, while a 1 percent appreciation in trading partner’s real exchange rate is associated with a 0.94-1.45 percent increase in the coverage ratio. Our estimates are in line with the existing empirical studies that estimate the exchange rate and income elasticities of Turkish imports and exports.