Export and Import Functions (Empirical Analysis on the Example of the Czech Republic)

František Obešlo

doi:10.18267/j.efaj.184

Abstract

This paper focuses on import and export of goods of the Czech Republic. The Czech Republic is very open country in European Union. Ratio of import and export of goods and services to GDP is above European Union average. The goal is to find explanatory variables, which have an influence on import and export of goods and to build robust and economically interpretable models. Models are created by cointegration analysis. The advantage of cointegration analysis and error correction models is avoiding spurious regression and differentiation of short-term and long-term relations. There will be used ARDL approach for building models.

Highlights

The Czech Republic is a small open economy in the middle of Europe
For small attention and big importance I have decided to build models for export and import of goods for the Czech Republic. It means to find explanatory variables, which has an influence on import and export and to build robust and economically interpretable models I will use simple oneequation ARDL models
Null hypothesis in Chow test says that model is stable. There is another term D which stands for explanation of sudden increase of import in the second quarter of the year 2004. This corresponds with entrance of the Czech Republic to European Union in the beginning of 2004

Summary

Introduction

The Czech Republic is a small open economy in the middle of Europe. Export and import of goods are an important part of GDP and Balance of Payments. There were quite many studies (Kreidl, 1995; Holub, 1996; Kapička, 1997, Hlušek and Singer, 1999; Tomšík, 2000; Mandel and Tomšík, 2001; Pánková, 2003) that tried to model export and import of goods (and services) in the Czech Republic. Only few studies were published (Havrlant and Hušek, 2011; Taušer et al, 2015) Regarding methodology both studies use cointegration analysis and length of time series is sufficient. For small attention and big importance I have decided to build models for export and import of goods (further only export and import) for the Czech Republic It means to find explanatory variables, which has an influence on import and export and to build robust and economically interpretable models I will use simple oneequation ARDL (autoregressive-distributed lag) models.

Methodology

Model of Export

Findings

Conclusion