Testing for structural change in the bilateral trade elasticities of Turkey

Abstract

This paper estimates the bilateral trade equations of Turkey and its major trading countries by using the Gregory and Hansen procedure. We allowed for a structural break at an unknown date within the Gregory and Hansen (GH) framework and obtained a cointegrating relationship especially between variables in the export and import demand equations at the bilateral level. The empirical analysis of the exchange rate and income elasticity of trade demand, over the period 1982-2007, is presented and discussed.