A dynamic analysis of France's external trade
The purpose of the present paper is to review the sources of France's trade surplus in recent years and to attribute trade balance movements strictly to those determinants of trade flows suggested by economic theory. These determinants are price and/or cost developments, and demand in France and in the rest of the world. A primary objective of the paper is to analyse the dynamics of adjustment of trade flows to changes in competitiveness and in relative demand. To do so, a cointegration/error-correction model is applied to flows of both imports and exports, and the estimates of key elasticities obtained are instrumental in shedding light on this question.
|Date of creation:||Oct 1997|
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