The purpose of this master thesis is to analyse to what degree the Norwegian mainland exports are affected by changes in the economic conditions of the receiver countries. The mainland exports have in 2012 reached a level higher than before the 2007 financial crisis, providing an impression that the Norwegian exports and thus the Norwegian economy is unaffected by the recent European sovereign debt crisis. An interesting question is whether the apparently stable nature of the mainland exports is merely a result of Norway engaging in trade with the countries that have not been critically affected by the debt crisis. A panel data analysis is applied to Norwegian mainland exports on a quarterly basis from 1989 to 2012 for the 11 largest recipient countries. The model applied shows how the mainland exports are affected by the gross domestic product of the receiver countries, the real exchange rate between Norway and the recipient countries and the distance between Norway and the recipient countries. Traditional panel data estimators of fixed effects, random effects and pooled OLS are first applied, before taking on modern panel data estimation. The large time series dimension allows for a thorough analysis of the variables on a country-specific level, incorporating time series concepts like nonstationarity and cointegration. The final results are obtained by applying a dynamic error correction model for panel data. The overall results imply that the Norwegian mainland exports are in fact sensitive to changes in demand and competitive conditions. The results apply for the full sample, as well as for a subsample of the five largest countries. Examining the sample pre and post 2001 provides some indication that the effect has diminished over the past twenty years. However, the effect is still significant. The results support the theory that the apparent stability of the mainland exports may be a result of the stable economic conditions of the receiver countries. With this master thesis I hope to increase the awareness of the consequences applicable to the Norwegian economy if the economic crisis were to escalate and have a stronger effect on the countries that are important receiver countries of Norwegian mainland exports.
|Educations||MSc in Applied Economics and Finance, (Graduate Programme) Final Thesis|
|Number of pages||101|