I am looking forward to Friday's trade data

With another leading indicator hinting that the Euro Area is likely to be in technical recession, I am wondering the impact on Turkish exports during the remainder of the year. Of course, using the second most popular phrase of economists, that depends on the elasticities (the most popular being just it depends), and an export demand function for Turkey (or an import demand function for the Euro Area) needs to be estimated for that purpose.

I decided to look at the issue from the perspective of Turkish export supply, and going through the literature, I found a useful CBT paper. While the objective of the paper is to analyze structural changes in Turkish exports, it estimates export supply and import demand for Turkey. I liked the paper because the data is relatively recent and because the estimated coefficients are time-varying, as the authors have adopted the Kalman filter approach.

While I would expect the intercept term to be larger and increasing through time (just a hunch), their results, with the export demand elasticity of OECD income at around 0.5, suggest that the export pullback because of a European recession will not be as great as suggested in some recent research reports. Trade data for August, which will be released on Friday, and September, will be a litmus test in this sense.