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.

Financial Liberalization and Current Account Developments in New EU Member States

“…While in emerging Europe, rising investment has a more substantial role than declining savings, in the case of the Eurozone periphery imbalances are results of declining private sector saving. Bogdan et al (2017) examined whether the exchange rate policies affect current account balance and export performances in new member states of the European Union. The authors revealed that countries with a flexible exchange rate have better performance in current account and export.…”

Exchange Rate Policy and Export Promotion: Evidence from Uzbekistan

“…The analysis of the current account balance and export efficiency in the new EU member states shows that the current account balance and export activity were more efficient in countries with floating exchange rates in the precrisis period. In addition, it was noted that the exchange rate policy could still be a useful measure in enhancing exports [9].…”

Determinants of the Indonesia's current account balance: an error correction model approach

“…This is in line with the results of research from several researchers ENTREPRENEURSHIP AND SUSTAINABILITY ISSUES ISSN 2345-0282 (online) http://jssidoi.org/jesi/ 2020 Volume 7 Number 4 (June) http://doi.org/10. 9770/jesi.2020.7.4(55) such as Wanjau (2014), and Bogdan, Cota and Erjavec (2017). They prove that the increase in the exchange rate has a negative influence on current account.…”

“…The researcher recommends the government can define an exchange rate policy that leads to increased export demand so that the current account deficit (CAD) can be reduced and ultimately economic growth can be achieved sustainably. Bogdan, Cota and Erjavec (2017) have examined the relationship between current account balance and export performances in new EU countries. This study was conducted in 2017 using a linear regression method by entering exchange rate as one of its independent variable.…”