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The Dynamics of the Trade Balance and the Terms of Trade in Central and Eastern European Countries

Author

Listed:
  • Alexandra Ferreira-Lopes

    (ISCTE-IUL - Department of Economics, UNIDE-ERC and DINÂMIA)

  • Tiago Neves Sequeira

    (UBI and INOVA-UNL)

Abstract

In this work we assess the existence of a S-Curve pattern in ten Central and Eastern European Countries (CEEC-10) for the relation between the trade balance and the terms of trade. Empirical results support the existence of this curve for Slovenia, Czech Republic, Hungary, and also for an aggregate of the ten transition countries. In the case of Lithuania, Poland, Romania, and Slovakia the pattern is weaker than in the mentioned countries but it stills prevails. We then document this property of business cycles in the dynamic general equilibrium trade model of Backus, Kehoe, and Kydland (1994) calibrated specifically to match the CEEC-10 aggregate economy. Results support the existence of a S-Curve, except when technology shocks are absent and domestic and imported goods are perfect substitutes.

Suggested Citation

  • Alexandra Ferreira-Lopes & Tiago Neves Sequeira, 2010. "The Dynamics of the Trade Balance and the Terms of Trade in Central and Eastern European Countries," Working Papers Series 1 ercwp0310, ISCTE-IUL, Business Research Unit (BRU-IUL).
    • Handle: RePEc:isc:iscwp1:ercwp0310
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    File URL: http://bru-unide.iscte.pt/RePEc/pdfs/ERCwp0310.pdf
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    References listed on IDEAS

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    Cited by:

    1. Piotr Bórawski & Mariola Grzybowska-Brzezińska & James William Dunn & Spiro E. Stefanou, 2015. "Factors Shaping Agri-food Product Trade in Poland," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 63(4), pages 1221-1228.
    2. Mubasher Iqbal & Rukshana Kalim & Noman Arshed, 2019. "Domestic and Foreign Incomes and Trade Balance - A Case of South Asian Economies," Asian Development Policy Review, Asian Economic and Social Society, vol. 7(4), pages 355-368, December.

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    More about this item

    Keywords

    Central and Eastern European Countries; Current Account Dynamics; Terms of Trade; S-Curve.;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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