Academic Scientific JournalsTrade Elasticities in the Slovak Republic
Keywords:
income elasticity, price elasticity, exports, imports, international tradeAbstract
Slovakia as the small and very open economy with relatively limited scope of domestic market, insufficient raw materials and low agricultural potential is predestined for a further development of international trade and relations. One of the most important issues in open economies is to determine the effects of income and relative prices on the international trade. The purpose of this paper is the estimation of the price and income elasticities of the international trade in the case of the Slovak Republic. We use panel data regression for the Slovak economy in the period 1995–2018 for estimation import and export demand functions. Furthermore, these elasticities are re-estimated for different sub-periods in order to verify whether they are stable over time or they are changing with respect on the type of the exchange rate mechanism and adopting the euro by the Slovak Republic. We suppose that the income export elasticity will be high and the price elasticities will be low due to the participation of the Slovak Republic in the Eurozone and the high share of the EMU countries in the Slovak trade.
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