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Asymmetric and nonlinear dynamics in trade flows sustainability: Serbia and Romania

Author

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  • Mile Bošnjak

    (Department of International Economics, Faculty of Economics and Business, University of Zagreb, Trg J. F. Kennedyja 6, 10 000, Zagreb, Croatia)

Abstract

The research examines the sustainability of trade flows for two European post-communist economies: Serbia and Romania. We analysed two nonlinear forms of the relationship between exports and imports that cannot be explained by frequently applied linear model specifications. Newly developed nonlinear autoregressive distributed lag approach revealed the asymmetric and nonlinear long-run equilibrium between Serbian exports and imports. Nonlinearity tests indicated and the SETAR model specification confirmed threshold nonlinearity form in the Serbian trade flows pattern. Serbian trade flows still approach its sustainable equilibrium but the development pattern is promising. The results for Romania revealed another nonlinear form of the relationship between exports and imports, indicating a dependent cointegration. The paper provides robust results and supports the hypothesis that the relationship between exports and imports can be nonlinear and symmetric.

Suggested Citation

  • Mile Bošnjak, 2021. "Asymmetric and nonlinear dynamics in trade flows sustainability: Serbia and Romania," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 71(1), pages 161-180, March.
    • Handle: RePEc:aka:aoecon:v:71:y:2021:i:1:p:161-180
    DOI: 10.1556/032.2021.00007
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    More about this item

    Keywords

    asymmetric cointegration; nonlinearity; international trade; sustainability;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • F1 - International Economics - - Trade
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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