Income and Price Elasticities of Croatian Trade – A Panel Data Approach

Vida Bobić

No 25, Working Papers from The Croatian National Bank, Croatia

Abstract: This paper deals with the estimation of price and income elasticities of Croatian trade flows using disaggregated data by industries for the period after Croatia joined the WTO in 2000 and until 2007. Export and import demand functions are estimated for total merchandise trade as well as for several partner country subsamples, with controls for other potential trade flow determinants, such as the exchange rate, tariffs, FDI inflows and credit supply to particular industries. Given the dynamic nature of the studied flows and potential endogeneity issues, the models were estimated using the ArellanoBond method (1991). The results indicate that the sensitivity of both exports and imports to prices is relatively low, while income effects are stronger. These results are confirmed in all the country subsamples. The influence of other factors, however, does not appear to be as stable or uniform across country subsamples.

Keywords: trade modelling; income and price elasticities; panel data (search for similar items in EconPapers)
JEL-codes: F12 F14 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2010-04
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Persistent link: https://EconPapers.repec.org/RePEc:hnb:wpaper:25

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