IDEAS home Printed from https://ideas.repec.org/a/boh/actaub/v19y2016i1p10-19.html
   My bibliography  Save this article

Terms-of-Trade Shocks and Slovak Economy

Author

Listed:
  • Martin Lukáčik

    () (University of Economics in Bratislava)

  • Karol Szomolányi

    () (University of Economics in Bratislava)

  • Adriana Lukáčiková

    () (University of Economics in Bratislava)

Abstract

Using the structural vector auto-regression analysis of the terms-of-trade, trade balance, output, consumption and investment cyclical components we show that the relationship between the terms-of-trade and trade balance is negative and that the terms-of-trade shocks explain only a small fraction of business cycles in the Slovak economy. We use quarterly data in constant prices in the period 1997-2014. The results are in line with the theoretical and empirical studies in the contemporary world economic literature. The negative relationship between the terms-of-trade and the trade balance confirms a theoretical Obstfeld-Svensson-Razin effect. The positive effect of a change in the terms-of-trade on the trade balance - so called Harberger-Laursen-Metzler effect - is the smaller, the more persistent terms-of-trade shocks are. By capital adjustment costs, the theoretical effect may be even negative. A modest contribution of the terms-of-trade shocks to the business-cycle fluctuations in Slovakia is in line with other empirical papers around the world.

Suggested Citation

  • Martin Lukáčik & Karol Szomolányi & Adriana Lukáčiková, 2016. "Terms-of-Trade Shocks and Slovak Economy," Acta Universitatis Bohemiae Meridionales, University of South Bohemia in Ceske Budejovice, vol. 19(1), pages 10-19.
  • Handle: RePEc:boh:actaub:v:19:y:2016:i:1:p:10-19
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/acta-2016-0006
    Download Restriction: no

    More about this item

    Keywords

    Terms of Trade; Business Cycle; Slovak Economy; Trade Balance;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:boh:actaub:v:19:y:2016:i:1:p:10-19. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tereza Š ástková). General contact details of provider: http://edirc.repec.org/data/efjcucz.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.