Boris Cota

Current Account Balance and Export Performances: Evidence Based on New EU Countries

Abstract In this paper, we investigate whether the differences in the current account balance and export performances for a new EU countries are a result of exchange rate policies. The analysis shows that countries with a flexible exchange rate have better export performances and the current account balance in the pre-crisis period. The obtained results show that movements in the current account balance are mainly driven by domestic variables. In the countries with a flexible exchange rate, real and nominal depreciation affects export positively although the magnitude of these effects is tiny and limited to the crisis period. These results point to a higher significance of non-price competitiveness on export which should be a future research topic.

External imbalances in emerging and advanced European countries

Abstract This paper aims to explain some developments in current accounts across advanced and emerging European countries with a fixed exchange rate. Our main goal is to identify key factors affecting the external imbalances. This assessment of the cause of external imbalances will help us understand what has to be changed in European economies to recover the external balances going forward. We estimated a panel VAR model over the period 1999 to 2014 for a sample of 11 European countries that were split into two groups: advanced and emerging. The obtained results show that the real effective exchange rate has a negative effect on the current account balance in both groups of countries, although the effect is more pronounced in emerging than in advanced countries. Other variables such as the budget balance, economic growth, and output gap affect current account balance positively in advanced countries and negatively in emerging countries. Economic activity captured by output gap explains the highest portion of current account variations in emerging countries. In advanced countries, in addition to economic activity, the real exchange rate also plays a prominent role in current account imbalances.

Export supply function in Croatia

The main aim of this paper is investigation of the interplay between Croatian export supply and the real exchange rate, i.e., the relative prices. The price elasticity of export supply was analysed through modelling both the short- and the long-run structures of the model. Additionally, the relationship between export supply and production capacity was also subjected to the analysis. As a result, this paper provides some insights into the importance played by the real exchange rate and production capacity in explaining total Croatian export. The model is analysed over the period January 1994 to December 2002. In the long-run, variable income and real exchange rate show expected signs, and their influence on export supply is statistically significant. Lagged changes of the real exchange rate are not statistically significant for the current total export trade in the short-run. This implies that Croatian total export reacts parsimoniously and slowly to the changes in the real exchange rate. The phenomenon could be due to the large share those products in Croatian exports that are exchange rate-inelastic.