Sunk cost hysteresis in Turkish manufacturing exports

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2021-12

Author

Akdoğan, Kurmaş
Werner, Laura

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This article examines hysteresis in export entry-exit decisions of the Turkish manufacturing sector using the Preisach method. As the argument goes, sunk costs imply threshold levels of the exchange rate affecting the export market entry-exit behaviour of firms. The wait-and-see behaviour of firms in between these thresholds results in hysteresis in export markets at the aggregated level. Our results suggest sunk cost hysteresis for five subsectors of the Turkish manufacturing sector: clothing, textiles, machinery, tobacco products and communication equipment. The article also provides a more detailed look on the determinants of hysteresis behaviour in the clothing sector.

Subject Keywords

Hysteresis, Exports, Preisach method, Nonlinearity, Path-dependency

URI

https://hdl.handle.net/11511/96795

Journal

ODTÜ Gelişme Dergisi

Collections

Department of Economics, Article

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Citation Formats

K. Akdoğan and L. Werner, “Sunk cost hysteresis in Turkish manufacturing exports,” ODTÜ Gelişme Dergisi, vol. 48, no. 2, pp. 121–154, 2021, Accessed: 00, 2022. [Online]. Available: https://hdl.handle.net/11511/96795.