We thank Vladimir Benacek, Peter Egger, Marian Grendar, Jan Hanousek, an anonymous reviewer and participants at a number of seminar and conference presentations for helpful comments on earlier drafts of this paper. Vera Potacelova and Lucia Psenakova provided excellent research assistance. Karel Janda acknowledges research support provided during his long-term visits at University of California, Berkeley and Australian National University and his support as Affiliate Fellow at CERGE-EI. Our research was supported by the grants P403/10/1235, P402/11/0948, and P402/12/0982 of the Czech Republic Science Foundation, institutional support VSE IP100040 and research project of VUT in Brno no. FP-S-13-2148. The views expressed here are those of the authors and not necessarily those of our institutions. All remaining errors are solely our responsibility.
Credit Support for Export: Robust Evidence from the Czech Republic
Article first published online: 12 MAR 2013
© 2013 John Wiley & Sons Ltd
The World Economy
Volume 36, Issue 12, pages 1588–1610, December 2013
How to Cite
Janda, K., Michalikova, E. and Skuhrovec, J. (2013), Credit Support for Export: Robust Evidence from the Czech Republic. World Economy, 36: 1588–1610. doi: 10.1111/twec.12061
- Issue published online: 18 DEC 2013
- Article first published online: 12 MAR 2013
The topic of this paper is quite a novel one – it is one of few empirical academic papers dealing with export credit. Moreover, it is the first analysis of this kind which focuses on transition economies. The paper deals with export credit promotion in the Czech Republic. The development and structure of Czech trade and export support is presented first, followed by an econometric analysis of the gravity model of Czech Republic trade. A panel of 160 countries in 1996–2008 is analysed and two gravity models of exports for the Czech Republic are estimated, the static model by fixed effects (LSDV estimator) and the dynamic model by System GMM. Due to ambiguous conclusions we assume that the behaviour of our explanatory variables is not uniform and our data set behaves as a mixture of countries with heterogeneous behaviour. This means that traditional techniques of estimation which include all observations into one model do not give significant results. Thus, we use robust techniques of estimation that solve the problem of heterogeneous patterns in data sets. Out of several possibilities we use the Least Trimmed Squares estimator (LTS) with a leverage point. We show that guarantees are a significant factor that influences positively the volume of exports in the Czech Republic. Moreover, there exist more variables that affect the size of exports in the Czech Republic. Market forces described by GDP, distance, political risk or gross fix capital formation are significant in our econometric model. We find that higher GDP, shorter distance or lower political risk have a positive impact on Czech exports.