Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/121195
Authors: 
Falk, Martin
Year of Publication: 
2008
Series/Report no.: 
FIW Research Reports 013
Abstract: 
This paper investigates the determinants of the trade balance using panel data for 32 industrialized and emerging economies for the period 1990?2007. The results based on fixed effects models and linear mixed models allowing for random slope coefficients, show that the trade balance as a percentage of GDP is significantly positively related to real foreign GDP per capita of the trading partners. Real domestic GDP per capita has a negative effect on the trade balance. A real depreciation of the real exchange rate index leads to an improvement of the trade balance. However, in countries with a negative trade balance and/or a large positive net foreign direct investment position the trade balance is much less sensitive to movements in the real effective exchange rate index.
Subjects: 
Foreign Direct Investment
trade balance
real effective exchange rate index
fiscal balance
panel data methods
JEL: 
F10
F31
Document Type: 
Research Report

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