Abstract
One of the main aspects of the transition process in Central, Eastern and Southeastern European (CESEE) countries was the trade liberalisation. As their financial systems are still underdeveloped and the trade channel is the dominant shock transmitter, this paper focuses on export dynamics for a selected set of CESEE countries. The employed methodology, Global Vector Autoregressive (GVAR) approach, allows modelling interactions and spillovers among countries. Furthermore, it enables joint modelling of exports and imports. This is of particular importance as the opening of new markets enabled astonishing export growth, but also opened the CESEE markets to foreign products. The empirical analysis reveals that a shock in German imports has a larger impact on CESEE countries’ exports than a shock in German output. Moreover, the results indicate that the role of the real exchange rate is less pronounced in comparison to previous similar research.