Nonlinear Determinants of Türkiye’s Capital Goods Imports: Uncertainty, Industrial Production, and Real Exchange Rates

Capital goods are among Türkiye’s main import items. In this study, the effects of world uncertainty, industrial production index, and real effective exchange rates (REER) on Türkiye’s real capital goods imports over the 1994Q1-2025Q1 period are investigated with the Nonlinear Autoregressive Distributed Lag (NARDL) model to reveal asymmetries. Industrial production affects imports asymmetrically, surging during growth but exhibiting downward rigidity in recessions. Uncertainty confirms the Real Options Theory by affecting imports negatively in the short run, however it is ineffective in the long run. The asymmetric effect of the uncertainty is only directional. On the contrary, the REER has a symmetric effect on imports in the long-run. The results show Türkiye’s high dependence on imported capital goods and the importance of domestic capital goods for growth. These findings suggest that policies aimed at straightening resilience to global uncertainty in the short run may help stabilize capital goods import demand, especially during downturn periods.