The Effect of Exchange Rate Volatility on Turkey’s Exports to Euro Area: Panel Data Analysis with Discrete Wavelet Transform

Whether exchange rate volatility has a negative impact on the volume of exports has been debated since abandonment of fixed exchange rate regime. the effects of the exchange rate volatility on turkey’s exports to euro zone are investigated in this study for the period 2000q1-2012q2 with panel data analysis. furthermore these effects are investigated for different frequency band via discrete wavelet transform of the original series. the empirical results suggest that exchange rate volatility has no negative impact on exports of turkey to euro area in the short run, whereas in the long run negative effects may emerge.