IDEAS home Printed from https://ideas.repec.org/a/vrs/seejeb/v14y2019i1p21-33n4.html
   My bibliography  Save this article

Determinants of Current Account in Cases of Serbia and Romania: Time-Varying Parameters Approach

Author

Listed:
  • Bošnjak Mile

    (PhD, Assistant Professor, University of Zagreb, Faculty of Economics and Business)

Abstract

Following competing theories, the paper brings the determinants of the Serbian and Romanian current account dynamics with policy implications. The research sample consists of quarterly time series data over the period 2004q1–2017q2 and 2007q1-2017q4 for the cases of Serbian and the Romanian case, respectively. The estimates from the state space model with time-varying parameters (TVP) approach suggest that role of domestic demand is significant in both cases even though more prominent in case of Serbia. Marshall-Lerner conditions were fulfilled in case of Serbia while not in the Romanian case. The effects of money supply on the current account is found to be in line with the monetary approach in case of Romania while in the Serbian case the effect of an increase in the money supply is positive. Consequently, to resolve the issue of the current account deficit the research findings suggest the country-specific policy mix for each country.

Suggested Citation

  • Bošnjak Mile, 2019. "Determinants of Current Account in Cases of Serbia and Romania: Time-Varying Parameters Approach," South East European Journal of Economics and Business, Sciendo, vol. 14(1), pages 21-33, June.
    • Handle: RePEc:vrs:seejeb:v:14:y:2019:i:1:p:21-33:n:4
    DOI: 10.2478/jeb-2019-0004
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/jeb-2019-0004
    Download Restriction: no
    File URL: https://libkey.io/10.2478/jeb-2019-0004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Srđan Boljanović, 2012. "A Sustainability Analysis Of Serbia’S Current Account Deficit," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 57(195), pages 139-172, October -.
    2. Teuta ISMAILI-MUHARREMI, 2015. "Factors Affecting Current Account in the Balance of Payments of Selected Western Balkan Countries," The Journal of Accounting and Management, Danubius University of Galati, issue 3, pages 61-68, December.
    3. Harvey,Andrew C., 1991. "Forecasting, Structural Time Series Models and the Kalman Filter," Cambridge Books, Cambridge University Press, number 9780521405737, January.
    4. International Monetary Fund, 2010. "The Credit Boom in the EU New Member States: Bad Luck or Bad Policies?," IMF Working Papers 2010/130, International Monetary Fund.
    5. Unger, Robert, 2017. "Asymmetric credit growth and current account imbalances in the euro area," Journal of International Money and Finance, Elsevier, vol. 73(PB), pages 435-451.
    6. Mile Bošnjak & Ivan Novak & Ante Krišto, 2018. "Monetary and absorption approach to explain the Croatian current account," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 36(2), pages 929-946.
    7. Anne-Gaël Vaubourg, 2016. "Finance and International Trade: A Review of the Literature," Revue d'économie politique, Dalloz, vol. 126(1), pages 57-87.
    8. Alka Obadić & Tomislav Globan & Ozana Nadoveza, 2014. "Contradicting the Twin Deficits Hypothesis: The Role of Tax Revenues Composition," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(6), pages 653-667, December.
    9. M. Fatih Ekinci & F. Pinar Erdem & Zubeyir Kilinc, 2015. "Credit growth, current account and financial depth," Applied Economics, Taylor & Francis Journals, vol. 47(17), pages 1809-1821, April.
    10. Xiaobing Huang & Xiaolian Liu, 2017. "How do firms finance their exports? – evidence from China," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 26(2), pages 154-173, February.
    11. J. J. Polak, 1957. "Monetary Analysis of Income Formation and Payments Problems," IMF Staff Papers, Palgrave Macmillan, vol. 6(1), pages 1-50, November.
    12. Long Zhao & Zuanshi Liu & William Wei & Bernadette Andreosso-O’Callaghan, 2017. "FDI outflows, exports and financial development," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 44(6), pages 987-1002, November.
    13. Juann H. Hung & Edward N. Gamber, 2010. "An Absorption Approach to Modeling the US Current Account," Review of International Economics, Wiley Blackwell, vol. 18(2), pages 334-350, May.
    14. Salvador Gil-Pareja & Rafael Llorca-Vivero & José Antonio Martínez-Serrano, 2017. "Does the Degree of Development Matter in the Impact of Banking Crises on International Trade?," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 829-848, August.
    15. Zaman, Gheorghe & Georgescu, George, 2014. "Romania’s external debt threats," Working Papers of Institute for Economic Forecasting 141215, Institute for Economic Forecasting.
    16. Bošnjak Mile & Kordić Gordana & Bilas Vlatka, 2018. "Determinants Of Financial Euroisation In A Small Open Economy: The Case Of Serbia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 63(218), pages 9-22, July – Se.
    17. Luis Sastre, 2018. "Marshall-Lerner Condition and the Balance of Payments Constrained Growth: The Spanish Case," Review of Economics & Finance, Better Advances Press, Canada, vol. 13, pages 29-38, August.
    18. Constantin ANGHELACHE & Gabriela Victoria ANGHELACHE & Mirela PANAIT & Ihab Jweida SJ JWEIDA, 2016. "The Analysis of International Trade of Romania," Romanian Statistical Review Supplement, Romanian Statistical Review, vol. 64(12), pages 93-99, December.
    19. Kauko, Karlo, 2014. "How to foresee banking crises? A survey of the empirical literature," Economic Systems, Elsevier, vol. 38(3), pages 289-308.
    20. Bilas Vlatka & Bosnjak Mile & Novak Ivan, 2017. "Examining the Relationship between Financial Development and International Trade in Croatia," South East European Journal of Economics and Business, Sciendo, vol. 12(1), pages 80-88, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mile Bošnjak & Vlatka Bilas & Domagoj Raèiæ, 2019. "Time-varying parameters of Croatian import demand," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 37(2), pages 853-872.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Can Xu & Jan P. A. M. Jacobs & Jakob de Haan, 2023. "Does Household Borrowing Reduce the Trade Balance? Evidence from Developing and Developed Countries," Open Economies Review, Springer, vol. 34(4), pages 759-787, September.
    2. Bilas Vlatka & Bosnjak Mile & Novak Ivan, 2017. "Examining the Relationship between Financial Development and International Trade in Croatia," South East European Journal of Economics and Business, Sciendo, vol. 12(1), pages 80-88, April.
    3. Egzona Hani Selimi & Milan Eliskovski, 2018. "The effect of household and enterprise credit on current account balance: Evidence from the Republic of North Macedonia," Working Papers 2018-09, National Bank of the Republic of North Macedonia.
    4. Inagaki, Kazuyuki, 2021. "How are the international capital flows of rapidly aging countries affected by the elderly working longer?," Economic Modelling, Elsevier, vol. 97(C), pages 285-297.
    5. Nazli Toraganli & Hasan Murat Ertugrul, 2016. "Does credit composition matter for current account dynamics? Evidence from Turkey," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(8), pages 1090-1100, November.
    6. Avanzi, Benjamin & Taylor, Greg & Vu, Phuong Anh & Wong, Bernard, 2020. "A multivariate evolutionary generalised linear model framework with adaptive estimation for claims reserving," Insurance: Mathematics and Economics, Elsevier, vol. 93(C), pages 50-71.
    7. Gérard Grellet, 1987. "Les politiques d'ajustement orthodoxes. Un point de vue critique," Revue Tiers Monde, Programme National Persée, vol. 28(109), pages 9-23.
    8. David Bolder & Shudan Liu, 2007. "Examining Simple Joint Macroeconomic and Term-Structure Models: A Practitioner's Perspective," Staff Working Papers 07-49, Bank of Canada.
    9. Tobias Hartl & Roland Jucknewitz, 2022. "Approximate state space modelling of unobserved fractional components," Econometric Reviews, Taylor & Francis Journals, vol. 41(1), pages 75-98, January.
    10. Moshe Buchinsky & Phillip Leslie, 2010. "Educational Attainment and the Changing U.S. Wage Structure: Dynamic Implications on Young Individuals' Choices," Journal of Labor Economics, University of Chicago Press, vol. 28(3), pages 541-594, July.
    11. Ippei Fujiwara & Koji Takahashi, 2012. "Asian Financial Linkage: Macro‐Finance Dissonance," Pacific Economic Review, Wiley Blackwell, vol. 17(1), pages 136-159, February.
    12. Obryan Poyser, 2017. "Exploring the determinants of Bitcoin's price: an application of Bayesian Structural Time Series," Papers 1706.01437, arXiv.org.
    13. Waliullah & Mehmood Khan Kakar & Rehmatullah Kakar & Wakeel Khan, 2010. "The Determinants of Pakistan’s Trade Balance: An ARDL Cointegration Approach," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(1), pages 1-26, Jan-Jun.
    14. Škare, Marinko & Mošnja-Škare, Lorena, 2019. "Economic policy implications of the Gibson Law in the Netherlands (1800–2012)," Journal of Policy Modeling, Elsevier, vol. 41(5), pages 926-942.
    15. Rob Luginbuhl, 2020. "Estimation of the Financial Cycle with a Rank-Reduced Multivariate State-Space Model," CPB Discussion Paper 409, CPB Netherlands Bureau for Economic Policy Analysis.
    16. Jacob M. Meyer, 2020. "Checks and Imbalances: Exploring the Links between Political Constraints and Banking Crises using Econometric Mediation," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 63(1), pages 71-96.
    17. repec:zbw:bofitp:2017_016 is not listed on IDEAS
    18. Lumengo Bonga‐bonga, 2009. "The South African Aggregate Production Function: Estimation Of The Constant Elasticity Of Substitution Function," South African Journal of Economics, Economic Society of South Africa, vol. 77(2), pages 332-349, June.
    19. Dewachter, Hans & Iania, Leonardo, 2011. "An Extended Macro-Finance Model with Financial Factors," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 46(6), pages 1893-1916, December.
    20. Gachet, Ivan & Girjalva, Diego & Rivadeneira, Ana & Uribe, Carlos, 2007. "Un Marco de Consistencia Macroeconómica para la Economía Ecuatoriana: Un Regreso a los Fundamentos [Macroeconomic Consistency Framework for the Ecuadorian Economy: Getting Back to Fundamentals]," MPRA Paper 16799, University Library of Munich, Germany.
    21. Martha Misas & Enrique López, 1999. "El producto potencial en Colombia: una estimación bajo var estructural," Coyuntura Económica, Fedesarrollo, September.

    More about this item

    Keywords

    Serbia; Romania; current account; time-varying parameters;
    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:seejeb:v:14:y:2019:i:1:p:21-33:n:4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.