DETERMINANTS OF EXPORT AND IMPORT FUNCTIONS IN THE EU MEMBER COUNTRIES

Deepening in asynchronous current account imbalances in the European Union member countries has been examined in the recent empirical literature since the Euro Area establishment. Comprehensive investigation of the main current account determinants is therefore crucial for understanding the key drivers of increasing external imbalances on the common market. This idea is even more challenging considering particular contribution of a single currency to the competitiveness issues in the Euro Area that may result in the proposition of a two speed currency area in the near future. In the paper we have estimated the main determinants of disaggregated export and import demand functions in the European Union member countries. Our analysis based on the panel data was conducted on the sample of 21 European Union member countries. Our results indicate relatively a significant importance of intermediates in the external trade within as well as outside European Union from both territorial and commodity aspects.