Econometric analysis of lithuania's foreign trade

Countries that are open to international trade grow faster, provide higher income, give more opportunities to their people, and improve companies productivity. The aim of this thesis is to identify the relationship of the demand and supply factors for Lithuanian domestically produced exports (excluding energy products). Supply and demand functions for the traditional Armington model and the small country model are estimated by the ARDL bounds testing approach to cointegration. Unit root tests are used to determine the degree of the integration of time series. The dataset is tested for outliers and structural breaks, which are accounted for in the econometric analysis. The assumptions of models outliers are tested by Ljung - Box test of autocorrelation, Shapiro Wilk test of normality and Breusch - Pagan test for heteroskedasticity. The findings suggest that export prices and volumes are explained by demand and supply factors. The short-run impact reveals by demand, and the long-run by supply components. Lithuania is a small and open economy country act in the monopolistic markets