Fiscal devaluation and net export: dynamic panel data analysis on the Euro Area

ABSTRACT

This study examined whether the fiscal devaluation affected the net export balance in the short and long term by using a dynamic panel data model in the period range between 1995 and 2018 for the Eurozone countries. According to the results of the study, fiscal devaluation improves the net export balance in the short and long term. However, it should be noted that the improvement in long-term net export balance is stronger than other empirical studies.

KEYWORDS:

• Fiscal policy
• fiscal devaluation
• dynamic panel data
• net export

JEL CLASSIFICATION:

• H2
• H3
• E6
• F4

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Portugal, Italy, Ireland, Spain, Greece.