Ekonomika
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CAUSES AND CHARACTERISTICS OF BUSINESS CYCLE IN LITHUANIA: A STRUCTURAL VARAPPROACH
Get PDFWe investigate the structural disturbances underlying the business cycle in Lithuania in the bivariate time series framework. In the structural VAR model constructed productivity, hours of work and output fluctuations over the business cycle are composed of technology and non-technology shocks. We find that a technology shock has a persistent positive effect on all three variables. Non-technology disturbance has a long-term impact on working hours and output, but it has a negligible short-run effect on productivity.Differently from Gali (1999), the study has revealed no significant correlation between productivity and working hours under the effects of technology shocks on Lithuanian data. In contrast with the results of developed countries, non-technology shocks result in a significant negative correlation between the working hours and labour productivity in Lithuania.Historical decomposition of output, productivity and working hours series allows distinguishing four different episodes of Lithuanian economy during the analysed timeline. In 1999, negative technology shocks played the biggest role in pushing the output down. During the period 2001–2004, the real GDP growth was supported by productivity increase due to technology shocks; in 2005–2008, non-technology shocks and the higher working hours were fuelling output growth together with a positive impact of the technology shock on productivity growth. Finally, 2008–2011 is the period of negative technology and non-technology shocks
THE EFFECTS OF MACROECONOMIC CONDITIONS ON LOAN PORTFOLIO CREDIT RISK AND BANKING SYSTEM INTEREST INCOME
Get PDFThis article presents on analysis of macroeconomic conditions in the EU countries in relation loan portfolio to credit risk and banking system interest income. The changing economic environment of banks influences their risks and activity results, so it is important to find the macroeconomic indicators that can determine the changes in debtors’ credit risk and banks’ financial condition. The banking system performs very important functions in a country’s financial system, so for its stability it is important to be able to predict the financial results of the banking system in relation to changes in the economic environment. The new Basel III Agreement seeks to improve the financial sector’s resistance to the possible negative scenarios in the economy and motivates to develop the credit risk assessment models considering their dependence on business cycles. For this reason, the statistical dependence between the set of macroeconomic factors and the loan portfolio credit risk together with interest income were estimated in this research. A statistical classification and regression tree model was developed, which allows to predict the possible changes in the interest income of a country’s banks with the 82.7% accuracy
ASSESSING THE APPLICATION OF SECURITISATION IN LITHUANIA
Get PDFThe aim of this article is to analyse the application possibilities of the securitisation mechanism in Lithuania. Securitisation has been used for a few decades by banks as an instrument to decrease credit risk and broaden the sources of funding. The increasing demand for asset-backed securities has prompted the development of this mechanism. Nevertheless, despite its benefits, if used irresponsibly, this mechanism can also create risks to financial stability. Foreign capital banks dominate in the Lithuanian banking sector, and their financing structure is highly based on parent bank loans, which is the second largest financing source after deposits. As the recent economic crises have shown, the flow of this resource is unstable and pro-cyclical. Therefore, banks ought to seek additional funding sources. The issue of securities backed by bank loans could be one of those sources. The authors of this article, with the help of regression analysis, have assessed a possible effect of additional credit flow, which could be attracted by banks using securitisation, on country’s GDP. The analysis has shown that certain types of loans can significantly impact the country’s GDP growth. The most significant effect on GDP would be reached, if banks would securitize new loans issued to households and use the obtained funds to issue more loans to households
GOVERNMENT DEBT SUSTAINABILITY: THE LITHUANIAN CASE
Get PDFThe paper deals with some aspects of sustainability of the government debt of Lithuania for a long, medium and short time horizon. The purpose of the study is to investigate the sustainability of the debt with respect to the nominal GDP growth, the interest rate on the debt, and the primary budget deficit. The differential equations calculus technique is used for the analysis of the debt. A scenario approach is used to simulate the sensitivity of the debt to economic shocks. An inequality for a non-increasing debt over a medium term is applied for the possibility to restore the level of the debt to a pre-crisis level. The sensitivity of the debt to a short movement of interest rate, the GDP growth rate and the primary budget deficit is investigated. A rule of debt change in a short run by one percentage point is formulated
SOURCES OF LITHUANIAN ECONOMIC GROWTH: AN EMPIRICAL ANALYSIS WITH SECTORAL DATA
No full textAbstract. In this paper, sources of economic growth are analyzed by an empirical investigation based on annual Lithuanian data of sectoral national accounts for the period from 1996 to 2010. The extent to which productivity variations in private Lithuanian economy can be explained by the production factors of physical as well as human capital, and inter-industry productivity spillovers and scale economies, is estimated by a regression analysis, based on the production function approach. The results have revealed that the endogenous growth model, which includes physical and human capital input variables and also variables of inter-sectoral productivity spillovers and scale economies, associated with the sectoral level of human capital, explains a considerable part of productivity growth. The factor of scale economies, related to sectoral capital investment, was not supported by the empirical investigation.Key words: economic growth, inter-industry spillovers, scale economies associated with human capita
SVAR ANALYSIS OF THE IMPACTS OF CORPORATE TAXATION ON THE MACRO ECONOMY OF LITHUANIA
No full textAbstract. This study aims to investigate the effects of tax policy on the macroeconomic variables of Lithuania. Special attention is devoted to conclusions concerning the impact of corporate taxation. The methodological framework is structural vector autoregression models identified using the Cholesky and Blanchard–Perotti approaches. Investigations of the impact of fiscal policy have been scarce in the empirical literature of Lithuania. The authors of this article use the methodology of assessing the impacts of fiscal policy that has not been used in Lithuania so for.JEL classification: E62, H25, F21.Key words: SVAR model, impulse response functions, fiscal policy, capital tax, investmen
MAIN REASONS BEHIND SHADOW ECONOMY
No full textAbstract. The main goal of this sludy was to identify the main drivers of the shadow economy and to evaluate its impact on the collection of the state budget income. The paper tries to explain what factors affect the origination and development of the shadow economy. The main analysed factors include unemployment rate and the burden of taxation. Authors have made a three-way analysis including a correlation analysis, a review of the statistical, data and a sociological survey.The analysis has shown that there is no single factor to be considered as most significant for the shadow economy; is conditioned by a complex of related economic, legal and administrative, social, and psychological factors. The list of the most relevant factors is provided. In summary, the paper also provides the recommended approaches to fight the shadow economy.Key words: shadow economy, state budget income, unemployment, burden of taxatio
IS THERE A “LOW INTEREST RATE TRAP”?
Get PDFThis article stylizes the monetary policy features applied during the chairmanship of Mr. Alan Greenspan and condenses statistical discussion into the “low interest rate trap” in the U.S. economy. Data from the U.S. in the decade prior to the 2008 financial crisis are used. A monetarist solution to the “low interest rate trap” is provided. The paper challenges the theoretical discussion on the Keynes’ interest rate – output relationship, and poses the question whether difference in investment returns would present a different picture in output growth
MANAGERIAL ATTITUDES TOWARDS UNDERSTANDING THE EMPLOYEES’ NEEDS
No full textAbstract. The success of managing the activities of organizations is tightly related to solving the problem of effective work motivation. The solution is possible only by implementing an efficient employees’ motivation mechanism which is a considerable challenge to business organizations all over the world. The effectiveness of motivational tools created and used by managers is strongly correlated with recognizing the main needs of employees. Therefore, the authors of this paper tried to look at this important aspect of motivation through the prism of managerial attitudes. The empirical study was conducted in Lithuanian and Polish companies in which managers of different management levels took place. The purpose of the study has been to find out whether managers realize which needs are most important for their subordinates and whether they pay attention to these needs while pursuing an effective employee. The concept of this paper is based on the integration of management theory and actual practices.The methods of the study comprise system analysis, meta-analysis, survey, international comparisons. The findings of the study could be useful both for local companies’ managers and for foreign companies deciding to enter the Eastern Europe an market as well for researchers interested in CEE countries’ management peculiarities.Key words: employees’ needs, motivation, motivational profile, managerial attitude
ECONOMIC DEVELOPMENT OF ULTRA-SMALL PERIPHERAL WEST EUROPEAN REGIONS (CASE OF ÅLAND AND FAROE ISLANDS)
Get PDFThe aim of the study was identification of ultra-small territories, features of their economic development and modern business status in the context of the classification of small economies. The object of investigation is small economies of West European and Nordic countries as well as ultra-small autonomous territories of Åland and Faroes islands affiliated to Finland and Denmark, respectively. The hypothesis of the article is that ultra-small autonomous territories under consideration are developing as the “competitive sub-peripheries” due to their special industrial organization, stimulated by the national and, partially, by the EU economic policy supporting the economic growth of both autonomies. The methods of the study comprise analysis–synthesis, historical and logical methods, international comparisons. The main conclusion is that the Åland and Faroes islands are nowadays converting into the transport-logistics, informational, financial bridges among different European regions and countries