Foreign trade hysteresis: An empirical essay Turkish case

Authors : Koray Yıldırım, Neşe Algan, Harun Bal

Pages : 73-88

Doi:10.21121/eab.20250105

View : 105 | Download : 72

Publication Date : 2025-02-04

Article Type : Research Paper

Abstract :The permanent effects of temporary shocks in exchange rates on foreign trade flows are defined as hysteresis. In this study, hysteresis is analyzed on the basis of exchange rate and import relationship. Empirical findings point to the validity of hysteresis in the Turkish economy. Sunk costs are the main dynamics of hysteresis in the Turkish economy. As a matter of fact, hysteresis effects caused by sunk costs are determinant in the sustainability of the current account deficit.
Keywords : Hysteresis, Foreign Trade, Sunk Cost, Imports, Asymmetry Hypothesis

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