The time-invariable models would suffer to give a clearer description to the relationship between exchange rate and trade flows. Therefore, the growing strand of literature has failed to reach a consensus. This study aims to contribute to this discussion by employing not only nonlinear model to capture the asymmetric effect, but also to detect the time frequencies and explore the lead-lag relations between real exchange rate and trade balance between Libya and its major trade partner ‘Turkey’ by applying both NARDL and wavelet coherence approaches, using monthly data spanning January 2013 to December 2020, selected based on data availability. The findings disclose that trade balance responds to the real exchange rate asymmetrically. The asymmetric effect is skewed more in the negative direction, as the impact of negative change is significant and greater than the positive change in long run. While the oil price shocks positively impact trade balance, economic policy uncertainty negatively affects trade balance. The wavelet coherence analysis indicates that real exchange rate and economic policy uncertainty are lagging in trade balance, while oil price leads trade balance. Among various other policy suggestions, we recommend that stable exchange rate through the intervention in the foreign exchange market will promote the trade balance at the end.
This study examines the relationship between economic growth and environmental pollution in Turkey. The research uses annual time series data from 1970 to 2017. Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root tests were used to test the stationarity of the series. In this the Autoregressive Distributed Lag (ARDL) model is used as an estimation technique. Furthermore, the classical additive decomposition method was used to forecast the pollution. The results indicate that economic growth has a positive significant effect on environmental pollution in the short-run and positive but insignificant effect in the long-run. When the long-run and short-run elasticities were compared it is found that the long-run elasticity is greater than the short-run elasticity which challenges the validity of the Environmental Kuznets Curve (EKC) hypothesis and provides evidence against its existence in Turkey. The paper suggests that robust and effective environmental policies should be strictly implemented and closely monitored to reduce the environmental pollution and to ensure the preservation of resources for future generations.
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