Regression analysis of foreign trade in the CR in 1993-1998

This paper presents regression analyses of import and export functions in t he Czech Republic from 1993 to 1998. The first part of the article summariz es the standard Keynesian income approach to the balance of payments. This traditional theory is considered alongside the theory of the monetary appro ach. The author creates his own regression import and export function model s, in which he uses, besides traditional variables (GDP, exchange rate, dom estic and foreign inflation, import and export prices), such variables as r eal money supply, foreign direct investment, unemployment data and number o f working days. The results imply that domestic demand growth, represented by the combined effects of GDP and money supply growth, is the most importa nt factor in explaining import dynamics.