On the nexus between exchange rate and income distribution in Turkey: ARDL bound testing analysis

Arif Eser Güzel, Ünal Arslan

Abstract

If we talk about the importance of variables in economic development, income distribution is not the second to economic growth, especially in emerging countries. These emerging countries are generally characterized by the volatility of exchange rates, especially after most of the countries adopted floating exchange rates system. This paper investigates the impact of an increases in dollar value on income distribution using annual data in the period 1990-2016 for Turkey via an ARDL model and bound testing analysis. In constructing the empirical model, it also considers the impact of GDP per capita on the dependent variable. Findings/Originality: The paper finds that an increase in dollar value leads to a more unequal income distribution in Turkey. The dollar holds an important place in Turkey’s foreign trade. Therefore, the changes in the value of dollar results in significant welfare effects

Keywords

Exchange rate, Gini coefficient, Bound testing analysis.

Full Text:

PDF

References

Agénor, P. R. (2002). Macroeconomic adjustment and the poor: Analytical issues and cross-country evidence, Policy Research Working Paper Series No. 2788.

Alexander, S. S. (1952). Effects of a devaluation on a trade balance. Staff Papers, 2(2), 263–278.

Bahmani-Oskooee, M. (1997). Effects of devaluation on income distribution. Applied Economics Letters, 4(5), 321–323.

Bahmani-Oskooee, M., Goswami, G. G., & Mebratu, S. (2006). Black market premium and income distribution. The Journal of Developing Areas, 39(2), 17–28.

Bahmani-Oskooee, M., & Motavallizadeh-Ardakani, A. (2017). On the value of the dollar and income inequality: Asymmetric evidence from state level data in the US. Journal of Economic Asymmetries, 16(C), 64–78. https://doi.org/10.1016/j.jeca.2017.08.001

Bahmani-Oskooee, M., & Motavallizadeh-Ardakani, A. (2018). Exchange rate changes and income distribution in 41 countries: Asymmetry analysis. , 68, . Quarterly Review of Economics and Finance, 68(C), 266–282. https://doi.org/10.1016/j.qref.2017.11.009

Engle, R. F., & Granger, C. W. (1987). Co-integration and error correction: Representation, estimation, and testing. Econometrica: Journal of the Econometric Society, 55(2), 251–276.

Johansen, S., & Juselius, K. (1990). Maximum likelihood estimation and inference on cointegration—with applications to the demand for money. Oxford Bulletin of Economics and Statistics, 52(2), 169–210.

Kwiatkowski, D., Phillips, P. C., Schmidt, P., & Shin, Y. (1992). Testing the null hypothesis of stationarity against the alternative of a unit root: How sure are we that economic time series have a unit root?. , 54(1-3), 159-178. Journal of Econometrics, 54(1–3), 159–178.

Lim, M. H. (2014). Globalization, export-led growth and inequality: The East Asian story. (South Centre Research Paper No. 57). Geneva.

Mishkin, F. S. (2000). Inflation targeting in emerging-market countries. American Economic Review, 90(2), 105–109.

Pesaran, M. H., & Shin, Y. (1998). An autoregressive distributed-lag modelling approach to cointegration analysis. Econometric Society Monographs, 31, 371–413.

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326.

Shahbaz, M., Islam, F., & Butt, M. S. (2011). Devaluation and income inequality: Evidence from Pakistan (MPRA Paper No. 35522). Retrieved from http://mpra.ub.uni-muenchen.de/35522/

Shin, Y., & Schmidt, P. (1992). The KPSS stationarity test as a unit root test. Economics Letters, 38(4), 387–392.

Solt, F. (2016). The standardized world income inequality database. Social Science Quarterly, 97(5), 1267–1281.

Turkish Statistical Institute. (2018). Turkey Trade Balance. Retrieved from https://www.ceicdata.com/en/country/turkey

World Bank. (2017). World development Indicators: GDP per capita (constant 2010 US$). Retrieved June 15, 2018, from https://data.worldbank.org/indicator/NY.GDP.PCAP.KD

Article Metrics

Metrics Loading ...

Metrics powered by PLOS ALM




Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Economic Journal of Emerging Markets (EJEM) is accredited by the Ministry of Research, Technology and Higher Education of the Republic of Indonesia (RISTEKDIKTI), No. 30/E/KPT/2018. It is currently indexed in:

Emerging Source Citation Index Clarivate AnalyticsREPEC (Econpapers)EBSCO, ProQuestDirectory of Open Access Journals (DOAJ)Cite FactorSinta (Science and Technology Index)IPI (Indonesian Publication Index)OCEC WorldCatHarvard LibraryThe Univesity of ManchesterUniversity of OxfordGoogle ScholarAsean Citation IndexDimensions - Digital Science

  Harvard Library   Google Scholar     Indonesian Publication Index (IPI)   WorldCat  Harvard Library  University of Oxford    

 
 Creative Commons License
Economic Journal of Emerging Markets by https://journal.uii.ac.id/JEP/ is licensed under a Creative Commons Attribution 4.0 International License.