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An empirical analysis of the trade balance in the post-communist Albania

An empirical analysis of the trade balance in the post-communist Albania. Genci Gjanҫi, Ardian Ҫërava. Introduction. Trade balance reflects a country’s competitiveness in the world markets Albania experiencing a growing trade deficit since 1992. Introduction….

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An empirical analysis of the trade balance in the post-communist Albania

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  1. An empirical analysis of the trade balance in the post-communist Albania Genci Gjanҫi, Ardian Ҫërava

  2. Introduction • Trade balance reflects a country’s competitiveness in the world markets • Albania experiencing a growing trade deficit since 1992

  3. Introduction… • Few empirical studies on this topic for Albania. • Albania’s competitiveness a central issue of concern among scholars and policymakers. • Trade balance study ⇒ important policy implications

  4. Introduction… • We try to provide additional evidence on the relationship between exports and imports in Albania using more recent data that cover a longer period of time than those used by Çil Yavuz and Kiran (2012). • To our knowledge it is the only study that analyzes this relationship in Albania.

  5. Model and Data • Husted’s (1992 lnexpot - natural logarithm of the exports of goods and services in constant 2005 USD, lnimpot - natural logarithm of the imports of goods and services in constant 2005 USD, t - time α - constant term ε is the white noise error term.

  6. Nature of time series variables • 4 unit root tests • Augmented Dickey-Fuller (ADF) • Phillips-Perron (PP) • Kwiatkowski-Phillips-Schmidt-Shin (KPSS) • Dickey-Fuller Generalized Least Squares (DF-GLS.) • Unit root test results ⇒ both, lnexpot and lnimpot are I(1)

  7. Cointegration method • ARDL • good small sample properties • addresses omitted variable bias

  8. ARDL model • Our basic econometric model in the ARDL form: DUM - crisis dummy

  9. Model diagnostic tests • Several Model Diagnostic Tests • AR √ • JB √ • ARCH √ • RESET √ • CUSUM √ • CUSUM of Squares √

  10. Estimation results • statistically significant coefficients @ 1% and 5%.

  11. Cointegration check • Wald test • Computed F-statistic vs. critical values F-statistic by Narayan (2005)

  12. Results • Cointegration • A 10% increase of imports of goods and services accompanied with a 9.61% increase of exports of goods and services in Albania. • long-run coefficient is significantly smaller than one

  13. Conclusions • strong positive long-term relation between real exports and real imports in Albania • imports grow faster than exports ⇒ trade imbalance grows • Solution: policies that promote the country’s exports by increasing its competitiveness

  14. Thank you acerava@gmail.com

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