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Credit Support for Export: Econometric Evidence from the Czech Republic

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Abstract

The topic of this paper is quite a novel one - it is one of few empirical academic papers dealing with export credit. Moreover, it is the first analysis of this kind which focuses on transition economies. The paper deals with export credit promotion in the Czech Republic. The development and structure of Czech trade and export support is presented first, followed by an econometric analysis of the gravity model of Czech trade. A panel of 160 countries in 1996-2008 is analyzed and two gravity models of exports for the Czech Republic are estimated, the static model by fixed effects (LSDV estimator) and the dynamic model by System GMM. Due to ambiguous conclusions we assume that the behavior of our explanatory variables is not uniform and our data set behaves as a mixture of countries with heterogeneous behavior. This means that traditional techniques of estimation which include all observations into one model do not give significant results. Thus, we use robust techniques of estimation that solve the problem of heterogeneous patterns in data sets. Out of several possibilities we use the Least Trimmed Squares estimator (LTS) with a leverage point. We show that guarantees are a significant factor that influences positively the volume of exports in the Czech Republic. Moreover, there exist more variables that a effect the size of exports in the Czech Republic. Market forces described by GDP, distance, political risk or gross fix capital formation are significant in our econometric model. We find that higher GDP, shorter distance or lower political risk have a positive impact on Czech exports.

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Bibliographic Info

Paper provided by Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies in its series Working Papers IES with number 2012/12.

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Length: 40pages
Date of creation: May 2012
Date of revision: May 2012
Handle: RePEc:fau:wpaper:wp2012_12

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Keywords: export; government promotion; gravity model; panel data;

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References

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  1. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
  2. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
  3. Eva Ryšavá & Elisa Galeotti, 2009. "Determinants of FDI in Czech Manufacturing Industries between 2000-2006," Working Papers IES 2009/17, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Apr 2009.
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  6. Moser, Christoph & Nestmann, Thorsten & Wedow, Michael, 2006. "Political risk and export promotion: evidence from Germany," Discussion Paper Series 1: Economic Studies 2006,36, Deutsche Bundesbank, Research Centre.
  7. Gourieroux Christian & Monfort Alain & Trognon A, 1982. "Pseudo maximum lilelihood methods : applications to poisson models," CEPREMAP Working Papers (Couverture Orange) 8203, CEPREMAP.
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  9. Ernst Baltensperger & Nils Herger, 2009. "Exporting against Risk? Theory and Evidence from Public Export Insurance Schemes in OECD Countries," Open Economies Review, Springer, vol. 20(4), pages 545-563, September.
  10. Peter Egger & Thomas Url, 2006. "Public Export Credit Guarantees and Foreign Trade Structure: Evidence from Austria," The World Economy, Wiley Blackwell, vol. 29(4), pages 399-418, 04.
  11. Karel Janda, 2009. "Bankruptcies With Soft Budget Constraint," Manchester School, University of Manchester, vol. 77(4), pages 430-460, 07.
  12. Peter Egger & Michael Pfaffermayr, 2005. "Estimating Long and Short Run Effects in Static Panel Models," Econometric Reviews, Taylor & Francis Journals, vol. 23(3), pages 199-214.
  13. Burger, M.J. & van Oort, F.G. & Linders, G.J.M., 2009. "On the Specification of the Gravity Model of Trade: Zeros, Excess Zeros and Zero-Inflated Estimation," ERIM Report Series Research in Management ERS-2009-003-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
  14. Karel Janda, 2006. "Agency Theory Approach to the Contracting between Lender and Borrower," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2006(3), pages 34-47.
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Cited by:
  1. Janda, Karel, 2014. "Czech Export Credit Agencies and their Market Power," MPRA Paper 54097, University Library of Munich, Germany.

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