Gravity and Fiscal Models of Government Support of Export Credit in the Czech Republic

Abstract

The article deals with the export credit promotion in the CzechRepublic. The econometric analysis of the gravity model of Czech tradeshows that the credit support provided by specialized government agency,Czech Export Bank, has a positive but statistically weak influence onexport. The other determinants of the Czech export in our model are GDP,distance, gross fixed capital formation, and policy risk. The comparisonof estimated tax revenues from the supported projects with governmentsubsidies provided to the Czech Export Bank shows that export promotiondoes not create a financial burden for the government budget. Thebudgetary costs of export credit support are offset by the tax revenuesgenerated by supported export.