Constructing an Export Supply Function for Croatia

The main aim of this paper is investigation of the interplay between Croatian export supply and the real exchange rate, i.e. the relative prices. We analyse here the price elasticity of export supply through modelling both the short- and the long-run structures of the model. Additionally, the relationship between export supply and production capacity is also subjected to an analysis. As a result, this paper provides some insights into the importance played by the real exchange rate and production capacity in explaining Croatian exports.