INTERACTION BETWEEN INCOME - GDP AND INDUSTRIAL OUTPUT AND EXTERNAL BALANCE IN THE EASTERN EUROPEAN AND BALTIC COUNTRIES
Keywords:
GDP, industrial output, current account, trade balance, balance-of-payment models, OLS and VAR methods.Abstract
This paper analyses interaction between income (GDP and industrial output) and external balance (current account and trade balance) with the use of OLS and VAR/VEC techniques. Inverse relationship between the two appears to be important, but not unquestionable evidence in favor of intertemporal optimization of private and public consumption as predominant factor of income and external balance interaction.
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