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The Demand Function For Merchandise Exports: The Case Of Croatia

Author

Listed:
  • Mile Bosnjak

    (University of Zagreb)

  • Ivan Novak

    (University of Zagreb)

  • Maja Basic

    (University of Zagreb)

Abstract

The paper aims to examine demand for merchandise exports from Croatia as a function of relative prices and income of the European Union (EU) member countries. Data sample consists of quarterly time series data over the period 2000 q1 -2019 q1. The paper employed standard tests of cointegration and state space model with time-varying parameters approach to examine the relationship between merchandise exports and its assumed determinants. The results revealed demand function for Croatian merchandise exports highly elastic to changes in income and relative prices. Furthermore, there was sizable increase in demand for merchandise exports from Croatia as a consequence of joining EU. Eventually, the results were discussed in context of balance of payments constraints to growth theory and policy implications were derived.

Suggested Citation

  • Mile Bosnjak & Ivan Novak & Maja Basic, 2020. "The Demand Function For Merchandise Exports: The Case Of Croatia," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 29(1), pages 123-135, june.
    • Handle: RePEc:avo:emipdu:v:29:y:2020:i:1:p:123-135
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    References listed on IDEAS

    as
    1. Husted, Steven, 1992. "The Emerging U.S. Current Account Deficit in the 1980s: A Cointegration Analysis," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 159-166, February.
    2. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
    3. Mohamed Abbas Ibrahim, 2017. "An Examination of the Merchandise Imports Demand Function for Egypt," Applied Economics and Finance, Redfame publishing, vol. 4(2), pages 101-112, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Exports demand; income; relative prices; Kalman filter; Croatia;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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