Cointegration Approach to the Estimation of the Long-Run Relations between Exchange Rates and Trade Balances in Visegrad Countries

Jana Šimáková

Abstract

The paper deals with the relationship between exchange rates and foreign trade. The aim of this paper is to reveal the long-term effects of the level of exchange rates on the trade balances of the Visegrad Countries. As the different product categories are characterized by different price elasticity, exchange rate uncertainty sensitivity and countries are differentiated by consumer and producer behavior patterns, this paper uses territorial and commodity structuring of foreign trade data. An empirical analysis is performed for the period 1999

Keywords

cointegration, exchange rate, Marshall-Lerner condition, trade balance

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https://doi.org/10.5817/FAI2016-3-3

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