Prague Economic Papers 2016, 25(5):560-576 | DOI: 10.18267/j.pep.567

Cross-Border Effects of Car Scrapping Schemes: The Case of the German Car Scrapping Programme and its Effects on the Czech Economy

Petr Maleček1, Ota Melcher2
1 Faculty of Economics, University of Economics, Prague, Czech Republic (petrxmalecek@gmail.com).
2 Faculty of International Relations, University of Economics, Prague, Czech Republic (ota.melcher@vse.cz).

Many countries decided to launch car scrapping schemes during the 2009 crisis in order to support their car industries and to boost domestic demand. Owing to the existence of significant international trade links in the automotive sector, there is also a strong theoretical foundation for cross-border effects of such scrappage programmes. This paper explores spillovers of the German scheme to the Czech economy on the basis of a close mutual trade link between these two countries and the size of the Czech automotive sector. It is demonstrated that the German programme provided for a significant boost for Czech personal car exports, which were also coupled with increased imports due to large import requirements of the Czech automotive segment. Overall, the contribution of first-round effects of the German car scrapping scheme to the Czech real GDP growth in 2009 is estimated to have reached between 0.4 and 0.5 percentage points.

Klíčová slova: input-output tables, vector error correction model, international trade in personal cars, car scrapping scheme
JEL classification: C32, C67, F47, H20

Zveřejněno: 1. leden 2016  Zobrazit citaci

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Maleček, P., & Melcher, O. (2016). Cross-Border Effects of Car Scrapping Schemes: The Case of the German Car Scrapping Programme and its Effects on the Czech Economy. Prague Economic Papers, 25(5), 560-576. doi: 10.18267/j.pep.567
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