Export Composition and the Eurozone Trade Balance in Manufacturing Goods

Carlos Carrasco and Edgar Demetrio Tovar-García

Journal for Economic Forecasting, 2020, issue 1, 134-150

Abstract: Some Eurozone countries have been characterised by a persistently increasing trend in the external imbalances, involving potential risks. This research is pioneering in analysing the effects of export composition on the trade balance in manufacturing goods using bilateral trade flows among the EA-12 countries and their EU-15 partners. Based on dynamic panel data regression models, the results indicated a robust association between the share of hightechnology export goods and the trade balance. This association is robust during the period of growing imbalances (1999-2007) and for an expanded time span (1999-2015). In contrast to previous studies, traditional explanatory variables such as income elasticity and price elasticity did not show significant associations. Therefore, the policy makers need to be aware that the economic specializations of their countries, especially their export structures, play key roles in explaining and managing the external imbalances.

Keywords: European trade balance; manufacturing goods; export compositi (search for similar items in EconPapers)
JEL-codes: F14 F15 F32 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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