Journal of Stock & Forex Trading
Open Access

Abstract

Panel VAR Model Applied to Foreign Trade between Portugal and Regional Economic Blocs

Nerhum Laurindo Sandambi*

The study analyses foreign trade between Portugal and the regional economic blocs in the period 1980-2018. The main objective of the study is to analyse the behaviour of the volume of foreign trade transacted between Portugal and the regional blocs, to understand which impacts significantly influence trade and to analyse whether foreign trade is influenced by economic and physical distances. Thus, a dynamic panel VAR model was estimated, where the initial aim was to understand the effects of Impulse Response Functions (IRFs). The results show a positive impact on the volume of trade. This impact is related to a considerable increase in the GDP of the regional blocs under analysis, for example. On the other hand, the Impulse response functions allow us to show the behaviour of the variables, but there is no plausible influence. On the one hand, this is due to the fact that the economies under analysis have stable currencies. The oil price variable, for example, shows a positive impact, above all, depending on positive shocks in the international oil market, but there is a 78.5% positive impact on the volume of trade transacted. The tariff variable with a negative impact is associated with the different levels of trade policy application, with the trade policy applied with the PALOP countries, the EU, South Africa and Brazil being strictly different and external debt having a negative impact on the volume of trade transacted.

Published Date: 2025-01-23; Received Date: 2023-11-23