Cyclical-Adjusted External Balance of Goods and Services in the Czech Republic

Article develop the cyclical adjustment methodology of the balance of goods and services, which is beneficial especially for a small open economy. Cyclical adjustment procedure is applied and adjusted to the Czech data by quantifying cyclical determinants of foreign trade such as domestic and foreign output gap and trade prices deviations from the trend. Results show that cyclical adjustment of external trade balance provide a useful tool for assessing the sustainability of trade development and thus help to better analyze current situation and forecast short-term future development