The dynamics of the trade balance and the terms of trade in Central and Eastern European countries

Alexandra Ferreira Lopes; Tiago Neves Sequeira

doi:10.1556/aoecon.64.2014.1.3

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Acta Oeconomica

Volume/Issue:: Volume 64: Issue 1

The dynamics of the trade balance and the terms of trade in Central and Eastern European countries

Authors:

Alexandra Ferreira Lopes

Alexandra Ferreira Lopes University Institute of Lisbon (ISCTE - IUL) Business School and Business Research Unit Lisbon Portugal

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Tiago Neves Sequeira

Tiago Neves Sequeira University of Beira Interior (UBI) Department of Management and Economics Covilhã Portugal

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Pages:: 51–71

Online Publication Date:: 04 Mar 2014

Publication Date:: 01 Mar 2014

Article Category:: Journal Article

DOI:: https://doi.org/10.1556/aoecon.64.2014.1.3

Keywords:: Central and Eastern European countries; current account dynamics; terms of trade; S-Curve; C68; F32; F41

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In this work, we assess the existence of an S-Curve pattern in 10 Central and Eastern European countries (CEEC-10) for the relation between the trade balance and the terms of trade. Empirical results support the existence of this curve for Slovenia and Hungary. In the case of Bulgaria, the Czech Republic, and Slovakia the pattern is weaker, but it still prevails, as is the case for an aggregate of the 10 transition countries. We then document this property of business cycles in the dynamic general equilibrium trade model of Backus et al. (1994), calibrated specifically to match the CEEC-10 aggregate economy. Results support the existence of an S-Curve, except when technology shocks are absent and domestic and imported goods are perfect substitutes. Since technological shocks are determinant in explaining the S-Curve pattern and transition countries seem to be experiencing some type of technological shocks, it is not likely that this pattern will fade away in the near future and hence it is important for economic policy to be aware of this phenomenon and its consequences for these countries in terms of real convergence and the timing of euro adoption.

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Acta Oeconomica Periodical of the Hungarian Academy of Sciences

Print ISSN:: 0001-6373

Online ISSN:: 1588-2659

Associate Editors

Péter Benczúr, Joint Joint Research Center, European Commission
Dóra Benedek, International Monetary Fund
Balázs Égert, OECD
Dániel Prinz, World Bank
Rok Spruk, University of Ljubljana, School of Economics and Business, Slovenia

Editorial Board

Anders Åslund, Georgetown University and Advisory Council of CASE, USA
István Benczes, Corvinus University of Budapest, Hungary
Agnieszka Chłoń-Domińczak, SGH Warsaw School of Economics, Poland
Fabrizio Coricelli, University of Siena, Italy
László Csaba, Corvinus University of Budapest, Hungary and Central European University, Austria
Beáta Farkas, Faculty of Economics and Business Administration, University of Szeged, Hungary
Péter Halmai, Budapest University of Technology and Economics, and National University of Public Service, Hungary
Martin Kahanec, Central European University, Austria
David Kemme, University of Memphis, USA
Michael Landesmann, The Vienna Institute for International Economic Studies (WIIW), Austria
Péter Mihályi, Corvinus University of Budapest, Hungary
Debora Revoltella, European Investment Bank

Corvinus University of Budapest
Department of Economics
Fővám tér 8 Budapest, H-1093, Hungary
E-mail: judit.kalman@uni-corvinus.hu

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2024
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SJR index	0.201
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CiteScore	1.4
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SJR index	0.218
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Acta Oeconomica
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Acta Oeconomica
Language	English
Size	B5
Year of Foundation	1966
Volumes per Year	1
Issues per Year	4
Founder	Magyar Tudományos Akadémia
Founder's Address	H-1051 Budapest, Hungary, Széchenyi István tér 9.
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ISSN	0001-6373 (Print)
ISSN	1588-2659 (Online)