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The purpose of this paper is to analyze cointegration and causality relationships between spot and futures markets in Turkish foreign‐exchange markets.

The research employs Bounds cointegration test and Toda‐Yamamoto causality test to detect a possible risk transmission between spot and futures markets. Time series of Turkish spot and futures foreign‐exchange markets from January 2, 2006 to March 25, 2008 on a daily basis are used for empirical analysis.

The empirical tests suggest that there is unidirectional causality running from future exchange‐rate market to spot market implying that foreign‐exchange markets have informational efficiency in Turkey.

The paper has originality in both employing Bounds test and Toda‐Yamamoto test to examine the relationship between spots and derivative markets, and in being one of the first empirical papers examining Turkish futures markets. In addition, the paper presents a guide on how Bounds and Toda‐Yamamoto tests can be applied to detect interactions among markets without data stationarity.

The purpose of this paper is to investigate the relationship between trade openness and economic growth in developing countries. Under this aim, the co‐integration relationship between trade openness and economic growth of 17 developing countries is examined without relying on data stationarity.

The co‐integration relationship between trade openness and economic growth is analyzed by Bounds testing approach developed by Pesaran et al. In addition to this, the causality relationship is tested by causality analysis developed by Toda and Yamamoto.

According to the Bounds test results, co‐integration relationship has been detected for six countries and long‐term coefficients among the variables have been found positive and statistically significant. According to the Toda and Yamamoto causality analysis, causality has been detected for eight countries. In four of these, the direction of causality is from trade openness to economic growth and in the other four, vice versa.

The methodology employed provides an alternative framework for examining relationship among economic variables. The paper shows how to create co‐integration and causality tests without relying on data stationarity, which is a major problem in time series of economic variables. On the empirical side, it adds new empirical results into the literature in the name of identification of relationship between trade openness and economic growth in developing countries.