engleski

HYSTERESIS IN TRADE FLOWS OF EX-YUGOSLAV COUNTRIES

Financial and trade liberalization of European post-transition was accompanied with substantial current account deficit with long term persistence. This paper aims to examine sustainability of international trade flows for three ex-Yugoslav countries, namely Croatia, Slovenia and Serbia. Sustainability of international trade flows is an indicator of overall of macroeconomic stability in a country. Sample countries are still at different level of integration. Slovenia is a member of European Monetary Union (EMU), Croatia is member of European Union (EU) and on its path to EMU while Serbia is still in negotiation process towards membership in EU. Besides insights in country specific dynamics in current account and its sustainability the paper provides comparison among the countries. Contemporary literature suggests various approaches to examine sustainability of international trade flow. International trade flow for the countries of interest was previously considered. However, results always depend on data selection as well as on followed empirical approach. While considering previous findings this paper aims to make step ahead and illustrates persistence of endogenous shocks in international trade flows for the sample countries. Following unit root tests and quantile unit root test on a quarterly data sample from 1996q1 to 2020q2 on imports and exports the paper brings persistence of endogenous shocks in trade flows sustainability. The research results point out sustainable international trade flows with deterministic trend towards equilibrium. Persistence of endogenous shocks in all of the considered countries was analysed depending on sign and magnitude of endogenous shock. The research results point out asymmetries effects of endogenous shocks depending on its sign and magnitude. Empirical results from this paper rejected hypothesis of persistence in current account for the considered sample countries. However, negative endogenous shocks show tendency to persist longer in comparison to positive shocks. Dynamics of current account exhibited mean reverting property with linear deterministic trend.

currenta ccount ; sustainability ; unit root ; quantile unit root

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