4/2020 Karsten Staehr. Export performance and capacity pressures in Central and Eastern Europe

Working Papers of Eesti Pank 4/2020

This paper investigates whether various measures of capacity pressure or available production capacity may help predict the dynamics of exports from the EU countries in Central and Eastern Europe. The analysis uses annual panel data for the 11 countries from 2001 to 2019. Reduced form estimations reveal that cost competitiveness measures have little or no predictive power. The measures of capacity pressure comprise capacity utilisation in industry, the unemployment rate and the output gap, and the measures are all robust predictors of future export dynamics. The results are robust to various changes in the time and country sample, control variables and specification, and also hold in panel vector autoregressive models.

JEL Codes: F14, F17, E32

Keywords: export, competitiveness, capacity utilisation, output gap, unemployment, Central and Eastern Europe

DOI: 10.23656/25045520/042020/0177

Autori kontakt: karsten.staehr [at] taltech.ee

The views expressed are those of the authors and do not necessarily represent the official views of Eesti Pank or the Eurosystem.