ANALYSIS OF REAL EXCHANGE RATE IN TURKEY AND TURKEY – EU(27) PLASTICS INDUSTRY TRADE WITH DCC-GARCH METHOD

Abstract

In terms of economic theory, there is an important relationship between the trade balance and a country's real exchange rate in the short and long run. When the real exchange rate is high, it means that the relative price of goods at home is higher than the relative price of goods abroad. In this case, an increase in imports and a decrease in exports can be expected. This is because foreign goods are cheaper in real terms than domestic goods. Thus, when the real exchange rate is high, net exports fall while imports rise. On the other hand, if the real exchange rate is low, net exports increase when exports increase. This relationship helps to show the impact of changes in the real exchange rate.

In this context, this study discusses the relationship between the real exchange rate and trade of the plastics industry in Turkey based on data from Turkey and the EU for the period 2009m01-2022m10