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Current Account Balance and Export Performances: Evidence Based on New EU Countries

Željko Bogdan Boris Cota Nataša Erjavec
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Željko Bogdan Boris Cota Nataša Erjavec: Faculty of Economics and Business Zagreb, University of Zagreb, Zagreb, Croatia. Faculty of Economics and Business Zagreb, University of Zagreb, Zagreb, Croatia. Faculty of Economics and Business Zagreb, University of Zagreb, Zagreb, Croatia.

Zagreb International Review of Economics and Business, 2017, vol. 20, issue 2, 33-48

Abstract: In this paper, we investigate whether the differences in the current account balance and export performances for a new EU countries are a result of exchange rate policies. The analysis shows that countries with a flexible exchange rate have better export performances and the current account balance in the pre-crisis period. The obtained results show that movements in the current account balance are mainly driven by domestic variables. In the countries with a flexible exchange rate, real and nominal depreciation affects export positively although the magnitude of these effects is tiny and limited to the crisis period. These results point to a higher significance of non-price competitiveness on export which should be a future research topic. JEL Classification: C33, F32, F41

Keywords: current account balance; export; dynamic panel model; effective exchange rate; economic growth (search for similar items in EconPapers)
Date: 2017
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