Bilateral Trade Elasticity of Serbia: Is There a J-Curve Effect?
Keywords:JSerbia, J-curve, Marshall-Lerner conditions, Trade balance
We assess the bilateral elasticity effect of real exchange rate depreciation on the export and import demand functions of Serbia and its nine leading trade partners. Analysing quarterly data for the 2004-2015 period, we find the presence of a J-curve effect in the cases of Germany, Austria and Croatia. In contrast, we find that the Marshall-Lerner conditions are fulfilled in the case of bilateral trade with Austria. Finally, in our estimates the elasticity to income has a greater impact on the export and import demand functions than the elasticity to the exchange rate.
JEL Classification: F14, F31, F32
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