The Impact of Trade Policy Uncertainty, Country Risk Premium, and Real Effective Exchange Rate on Türkiye’s Exports
The Impact of Trade Policy Uncertainty, Country Risk Premium, and Real Effective Exchange Rate on Türkiye’s Exports

Summary/Abstract: Recent years have seen an acceleration in economic integration and foreign trade volumes, particularly among developing countries, as a result of increased trade liberalisation and international competition. Nevertheless, the unpredictability surrounding international trade policies has precipitated a decline in economic activity, exerting a deleterious effect on investments and exchange rate volatility in developing countries such as Türkiye. This study aims to investigate the impact of Trade Policy Uncertainty (TPU), Türkiye's annual Credit Default Swap (CDS) data, and the Real Effective Exchange Rate (EXRATE) on the unit value of exports (EXPORT), one of Türkiye's key foreign trade indicators. This study contributes to the literature as it is one of the few studies examining the impact of trade policy uncertainty on Turkish exports. Furthermore, by addressing the combined impact of financial variables such as CDS and effective exchange rate on exports alongside trade policy uncertainty, this study offers a unique contribution to the literature and provides guidance to policymakers. In line with the objective of the study, an ARDL cointegration test was performed on monthly data covering the period from February 1, 2008, to January 31, 2025, due to the different levels of stationarity of the variables. It was determined that the real effective exchange rate only positively affects export data in the long term, while CDS has a positive and significant effect on exports in both periods. It has been determined that TPU has no significant effect on Türkiye's exports. Due to Türkiye's strategic location and strategies in international trade, it is thought that the preference for alternative export locations in the face of high TPU weakens the effect of trade policy uncertainty.

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