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2016, vol. 40, iss. 1, pp. 139-154
The impact of national currency depreciation on the trade balance of the Republic of Serbia
Univeristy of Niš, Faculty of Economy, Serbia
Keywords: depreciation of the national currency; trade balance; real effective exchange rate; elasticity of imports and exports; exchange rate policy
Many empirical studies don't confirm, or, put in the second plan, the positive impact of the increase in the exchange rate (direct notation - European convention) on the balance of trade of the developing countries. Therefore, this paper examines the effect of the national currency depreciation on exports, imports and, in general, the balance of trade of the Republic of Serbia. This excludes the impact of inflation, which more or less cancels out the positive effect of the national currency depreciation. The methodology applied in the study highlights the correlation analysis and analysis of the elasticity of imports and exports in the context of the Marshall-Lerner condition. The research results show that the increase in the real effective exchange rate has a small positive effect on the trade balance, thanks to the relatively high elasticity of the domestic demand on imports. On the other hand, a distinct lack in the elasticity of exports to the stimulus through a reduction in the value of the national currency is noticeable, which is a problem of a structural nature, as well as the high import dependence on the largest export sectors of the Republic of Serbia.


article language: Serbian
document type: Original Scientific Paper
published in SCIndeks: 30/12/2016

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