The impact of the exchange rate on the foreign trade imbalance during the economic crisis in the new EU member states and the Western Balkan countries

Rajković, Marija Grdić; Bjelić, Predrag; Jaćimović, Danijela; Verbič, Miroslav

doi:10.1080/1331677x.2019.1708771

Cited by 14 publications

(14 citation statements)

References 31 publications

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“…The obtained results of the research are in line with the main conclusions of the theoretical considerations, as well as with the results of studies conducted by other researchers. Similar conclusions concerning the impact of REER on the foreign trade imbalances were reached by Rajković et al (2020). Results of their research show that during the global economic crisis, the balance of payments deficit is not impacted significantly by the exchange rate and those countries that use their own currency cannot substantially adjust their trade deficit by depreciating their currency.…”

Section: Discussionmentioning

confidence: 58%

Analysis of Factors Determining Global Payment Imbalances in 2000-2019

Twarowska-Mol¹,

Twarowska-Ratajczak²

2021

ERSJ

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Purpose:The aim of the paper is to identify and assess the impact of the determinants of global payment imbalances in 2000-2019. Design/Methodology/Approach: The study used the desk research method, including critical analysis of the recent literature and econometric methods of data analysis. The assessment of the evolution of global payment imbalances was carried out using the index of global payment imbalances (GI), while regression analysis based on panel data was used to assess the impact of factors influencing payment imbalances. Findings: The research proves that the factors significantly influenced the current account balances (CAB) in the analyzed countries were, real effective exchange rate, GDP growth, household consumption and government consumption, investment, government budget balance, terms of trade, and crude oil trade balance. Practical Implications: The conducted analyses allowed to formulate several recommendations for economic policy. China's exchange rate policy ceased to be the key factor generating global payment imbalances. Moreover, the change in China's economic model of reducing the role of external drivers of economic growth (export demand) and increasing the role of internal drivers (domestic demand) contributes to reducing China's external imbalances. Whereas, the sources of the U.S. current account deficit are particularly internal factors (domestic absorption). The government budget balance is one of the most important factors determining the CAB. Reducing government spending, can become an effective instrument to improve the current account balance. In addition, the balance of crude oil trade is a factor that has a large impact on the CAB. The energy transition of countries towards renewable sources can reduce global payment imbalances. Originality/value: The results contribute to the discussion on the determinants of the global payment imbalances. In this approach, a comprehensive assessment for all countries and by group is possible.

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Section: Discussionmentioning

confidence: 58%

Analysis of Factors Determining Global Payment Imbalances in 2000-2019

Twarowska-Mol¹,

Twarowska-Ratajczak²

2021

ERSJ

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“…Furthermore, the topic of interventions in exchange rates in order to support export potential due to events in global markets is also current. However, as Rajković et al (2020) showed in the example of the currencies of the Balkans and Central and Eastern Europe, currency depreciation did not have a significant effect on the trade deficit. Interestingly, Xing (2018) found the complete opposite to be true, with rising wages and the cumulative appreciation of the RMB undermining China's comparative advantage.…”

Section: Literature Reviewmentioning

confidence: 81%

Use of Neural Networks to Accommodate Seasonal Fluctuations When Equalizing Time Series for the CZK/RMB Exchange Rate

Rowland

Lăzăroiu

Podhorská

2020

Risks

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The global nature of the Czech economy means that quantitative knowledge of the influence of the exchange rate provides useful information for all participants in the international economy. Systematic and academic research show that the issue of estimating the Czech crown/Chinese yuan exchange rate, with consideration for seasonal fluctuations, has yet to be dealt with in detail. The aim of this contribution is to present a methodology based on neural networks that takes into consideration seasonal fluctuations when equalizing time series by using the Czech crown and Chinese yuan as examples. The analysis was conducted using daily information on the Czech crown/Chinese yuan exchange rate over a period of more than nine years. This is the equivalent of 3303 data inputs. Statistica software, version 12 by Dell Inc. was used to process the input data and, subsequently, to generate multi-layer perceptron networks and radial basis function neural networks. Two versions of neural structures were produced for regression purposes, the second of which used seasonal fluctuations as a categorical variable–year, month, day of the month and week—when the value was measured. All the generated and retained networks had the ability to equalize the analyzed time series, although the second variant demonstrated higher efficiency. The results indicate that additional variables help the equalized time series to retain order and precision. Of further interest is the finding that multi-layer perceptron networks are more efficient than radial basis function neural networks.

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“…The finding of import supports the theory of exchange rate and the changes in exchange rate. Also, Rajković, Bjelić, Jaćimović, & Verbič, (2020) predicts the association between foreign trade balance and real exchange rate undertaking Central and Eastern European (CEE) countries, and findings predict that in the economic crises scenario the nation which used their own currency experiences depreciating in the currency. Similarly there are more studies of different nation giving reflecting findings for instance, Arize, Malindretos, & Igwe, (2017); Dogru, Isik, & Sirakaya-Turk, (2019) and Choi, (2019).…”

Section: Relationship Between Exchange Rate and Trade Balancementioning

confidence: 99%

Exchange Rate Volatility and Import Trade Flow Evidence From India-U.S. at Industry Level

Gupta

Varshney

2021

International Journal of Asian Business and Information Management

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The centre interest of the study is to explore the impact of exchange rate volatility on the India-U.S. trade flow of Import on 6 industries spanned from September 2002 to June 2019. We investigate the relationship at disaggregate level by industry-wise data with monthly frequency. We employ exponential generalized autoregressive conditional heteroscedasticity (E-GARCH) model to gauge volatility and thereafter ARDL bound testing approach to unveil the short and long-run association of real exchange rate volatility and import. The empirical analysis implies the existence of both short-run and long-run effect in 5 importing industries except manufactured (engineering) goods. While real exchange volatility appears to have statistically significant effect in short-run, but also estimated short-run lasts onto long-run effect in only three industries. The results confirm the information of import in time-series analysis. The finding of the study helps to undertake the view of invariability and considering the industry before policy making.

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The impact of the exchange rate on the foreign trade imbalance during the economic crisis in the new EU member states and the Western Balkan countries

Cited by 14 publications

References 31 publications

Analysis of Factors Determining Global Payment Imbalances in 2000-2019

Analysis of Factors Determining Global Payment Imbalances in 2000-2019

Use of Neural Networks to Accommodate Seasonal Fluctuations When Equalizing Time Series for the CZK/RMB Exchange Rate

Exchange Rate Volatility and Import Trade Flow Evidence From India-U.S. at Industry Level

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