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Liberalization of Trade with the European Union and its Impact on the Reduction in Central European Free Trade Agreement 2006 Trade Balance Deficit

Author

Listed:
  • Safet Kurtovic

    (Faculty of Economics, University Dzemal Bijedic Mostar, Bosnia and Herzegovina.)

  • Sead Talovic

    (Ministry of Foreign Trade and Economic Relations of Bosnia and Herzegovina, Bosnia and Herzegovina.)

Abstract

This paper's main objective is to research the effect of liberalization of trade with the European Union and its impact on the reduction in trade balance deficit of Central European Free Trade Agreement (CEFTA) 2006. It utilizes panel data (PD) time-series in the interval from 2007 to 2013. It applies economical gravity model and econometric dynamic PD techniques: PD models, fixed effects models and random effects models (RE). It has been concluded that trade liberalization positively impacts the reduction in trade balance deficit of CEFTA 2006 countries, i.e. that export and import between the exporting country i and the importing country j within time period t, gross domestic product (GDP) of the country j, GDP per capita of the country j within time period t, distance between the country i and country j, dummy variables (free trade agreements and sharing a common border) are statistically significant. Additionally, it has been determined that FE is more favorable than RE when it comes to achieving better assessment of the effects of independent variables on a dependent variable.

Suggested Citation

  • Safet Kurtovic & Sead Talovic, 2015. "Liberalization of Trade with the European Union and its Impact on the Reduction in Central European Free Trade Agreement 2006 Trade Balance Deficit," International Journal of Economics and Financial Issues, International Journal of Economics and Financial Issues, vol. 5(2), pages 552-565.
    • Handle: RePEc:eco:journ1:2015-02-28
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    References listed on IDEAS

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    Cited by:

    1. Kurtovic, Safet & Halili, Blerim & Maxhuni, Nehat, 2016. "Liberalization of Trade with Leading Trade Partners: Some Evidence from Bosnia and Herzegovina," MPRA Paper 75053, University Library of Munich, Germany, revised 04 Nov 2016.
    2. Safet KURTOVIC & Blerim HALILI & Nehat MAXHUNI, 2017. "The effect of preferential tariffs of the EU: Some evidence from B&H," Journal of Economics and Political Economy, KSP Journals, vol. 4(3), pages 247-262, September.
    3. Safet KURTOVIC & Blerim HALILI & Nehat MAXHUNI, 2017. "The effect of preferential tariffs of the EU: Some evidence from B&H," Journal of Economics and Political Economy, EconSciences Journals, vol. 4(3), pages 247-262, September.

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    JEL classification:

    • F1 - International Economics - - Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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