Abstract
This paper analyzes the determinants of German exports to the euro area, which is the biggest market for German products. Three conditional error-correction models based on regionally disaggregated data are developed. One specification includes EMU industrial production and a real external value based on consumer prices, the other two use different EMU investment aggregates, the orresponding real external values and a proxy for European market integration to explain exports. The models perform equally well in a number of diagnostic tests. For short-term forecasts, however, the model using industrial production seems to be the best, since it outperforms the other models in terms of one-step ahead out-of-sample forecasts.
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An earlier version of this paper was presented at the annual 2002 congress of the Verein für Socialpolitik.
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Stephan, S. German Exports to the Euro Area. Empirical Economics 31, 871–882 (2006). https://doi.org/10.1007/s00181-006-0059-4
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DOI: https://doi.org/10.1007/s00181-006-0059-4
Keywords
- Export function
- Income and price elasticity of exports
- Intra-EMU trade
- Error-correction model
- Forecasting