Abstract: This study investigates the close link between real effective exchange rate and economic growth for Turkey spanning period 1970-2015 using time series data. We use Autoregression Distributed Lag Model (ARDL), multivariate Granger Causality and ADF and PP stationary tests to achieve the research objective. All the variables were found stationary after first differencing with intercept except GDP which stationary at level. The empirical result demonstrates that real effective exchange rate negatively affects economic growth in the short run; however, it exerts significant positive impact on growth in Turkish economy. We also found a bi-directional causality between real exchange rate and GDP growth.........
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