The export performance of the euro area: A panel quantile regression approach

This paper examines the impact of relevant factors on merchandise exports, volume growth, and the competitiveness of euro-area countries. It uses panel regressions to explain the development of merchandise exports in the euro-area countries by various price/cost competitiveness indicators, development of foreign and domestic demand, and the structure of merchandise exports. A cointegration analysis of panel time series was established by applying econometric tests and the cointegration equation for the period 1999-2018 was estimated using FMOLS (Fully Modified OLS) and DOLS (Dynamic OLS) estimators. We show that the increase in the share of information communication technology (ICT) product exports in the total merchandise exports of euro-area members had a positive impact on their export performance. The empirical results show that foreign demand has a positive impact on real merchandise exports, while the estimated coefficients decreased from the lower to upper quantiles. The results regarding price and cost competitiveness differ depending on the choice of indicators, but in general they are less robust. Therefore, we conclude that in the long run, non-price factors will play an increasingly important role in strengthening the competitive position of euro-area countries in international markets.