Translated title: The Impact of Devaluation through Price and Non-Price Competitiveness on Trade Balance
Authors: Celac, Mariana ; Mejstřík, Michal (advisor) ; Patáková, Magdalena (referee)
Document type: Master’s theses
Year: 2014
Language: eng
Abstract: This thesis examines the relationship between the real exchange rate and trade balance in eight countries with different level of development for the period 1991- 2012. Using merely exchange rate to improve the trade balance refers to price- competitiveness and relies on the satisfaction of Marshall-Lerner condition. Additionally, we articulate the influence of other underlying factors, defined as "non- price competitiveness", proxied with capital stock variable. A Vector Error Correction Model, based on Johansen's Methodology was implemented in our two econometric specifications. The key findings of the classical trade model indicate that M-L condition is met in five countries and devaluation of domestic currency would improve their trade balance in long run. VECM results from second model, which extended the traditional imperfect substitutes framework to include non-price competitiveness factor, shows pronounced influence of product quality on trade balance, capital stock variable being significant in most of the cases. The results show that trade balance reacts to both changes in relative prices and product differentiation, thus non-price competitiveness factors must not be neglected by policy makers. Our findings also indicate the existence of J-curve pattern, as reflected by short-run...
Keywords: Devaluation; Exchange rate; Marshall-Lerner condition; Price and Non-Price Competitiveness; Trade balance; VECM

Institution: Charles University Faculties (theses) (web)
Document availability information: Available in the Charles University Digital Repository.
Original record: http://hdl.handle.net/20.500.11956/63880

Permalink: http://www.nusl.cz/ntk/nusl-333026


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Universities and colleges > Public universities > Charles University > Charles University Faculties (theses)
Academic theses (ETDs) > Master’s theses