https://www.journals.vu.lt/ekonomika/issue/feed Ekonomika 2021-09-07T09:28:16+00:00 Vincentas Giedraitis vincas.giedraitis@ef.vu.lt Open Journal Systems <p>Founded in 1960 and dedicated to analysing the issues in the current economy, sectoral situation and development of business development strategies for local and foreign markets in the context of Central and Eastern European economic development. Indexed in the <em>Scopus</em> (Q4) database since 2020.&nbsp;</p> https://www.journals.vu.lt/ekonomika/article/view/24667 Risky Mortgages and Macroprudential Policy: A Calibrated DSGE Model for Lithuania 2021-09-07T09:28:16+00:00 Jaunius Karmelavičius jaunius.karmelavicius@gmail.com <p>Following the financial crisis of 2009 there was an emergence of macroprudential policy tools, as well as a need to model the macroeconomy and the financial sector in a coherent framework. This paper develops and calibrates a small open economy DSGE model for Lithuania to shed some light on the interactions between the macroeconomy and the banking sector, regulated by macroprudential policy. The model features housing market, and endogenous credit risk a la de Walque et al. (2010), whereby the household can default on mortgage repayments, what leads to housing collateral seizure. Foreign-owned banks, that are subject to risk-sensitive macroprudential capital requirements, take into account not only the mortgage default rate but also the cap on loan to value (LTV) ratio when making lending decisions. Using this mechanism, we show that while a more stringent LTV constraint reduced credit demand, it can also lead to an expansion in credit supply via lower credit risk. Therefore, a tightening of LTV requirement should result in only a slight reduction in mortgage lending, coupled with lower interest rate margins. The article compares the impact of the tightening of three macroprudential tools, namely, bank capital requirements, mortgage risk weights and LTV limit. We find that broad-based capital requirements, such as the counter-cyclical capital buffer, are less efficient in leaning against the housing credit cycle, because of a relatively large cost incurred on the firm sector.</p> 2021-09-06T10:14:15+00:00 Copyright (c) 2021 Jaunius Karmelavičius https://www.journals.vu.lt/ekonomika/article/view/22568 Word Portfolio Optimization in the Environment of Zero Interest Rate 2021-06-09T09:26:18+00:00 Darja Demcenko darjademchenko@gmail.com <p>This paper provides a deep analysis of ten globally diversified portfolios, composed of different financial instruments: bonds, shares, ETF’s, commodities, indexes, currencies, constructed applying various optimization techniques. &nbsp;Statistical moments, such as mean, standard deviation, kurtosis and skewness of portfolios are compared and discussed. Moreover, performance of the portfolios within the time horizon of one year estimating Sharpe ratio, Treynor ratio, Sortino ratio is presented. Furthermore, a risk analysis of created portfolios is evaluated in terms of historical VaR and CVaR applying confidence interval 95%. The main results of this paper reveal that the portfolio, which is optimized to minimize VaR produces high expected shortfall. Secondly, the Risk Parity portfolio, despite reducing volatility, has delivered the highest kurtosis of the return, which may indicate the possible tail loss. Furthermore, the maximum Sharpe ratio portfolio has delivered extremely high kurtosis in comparison with the kurtosis of the other portfolios. Finally, it is observed that for the Naïve diversification portfolio it has been typical to have the highest downside deviation. &nbsp;</p> <p>&nbsp;</p> 2021-06-09T08:07:11+00:00 Copyright (c) 2021 Darja Demcenko https://www.journals.vu.lt/ekonomika/article/view/21178 Saving Tendency of Developed and Developing European Countries 2021-06-09T09:26:19+00:00 Kıvanç Halil Arıç kharic@cumhuriyet.edu.tr Siok Kun Sek sksek@usm.my <p>In the previous literature studies, the saving condition is mainly examined focusing in Developing countries and Asian countries. The examination on the saving condition is crucial due to the linkages between saving accumulation and economic growth. The studies that focused in Developed countries are limited. This study extends the analysis by comparing the saving determination in Developed and Developing European countries and contributes to the literature of saving in two ways. First, the study compares the two panel groups, Developed and Developing European countries, which might reveal how economic development could affect the saving behavior. Second, the study considers the cross-section dependency effect in the panel data analysis by applying the testing (second-generation panel unit-root and cointegration tests) and the estimation approaches (Augmented Mean Group, AMG estimator). The study demonstrates that ignoring the cross-section dependency effect might lead to misleading results. Four determinants of savings are examined (GDP per capita, age dependency ratio on working group, inflation and government expenditure). Our results reveal the existence of cointegration and cross-section dependency in the saving relationship in both panel groups. Comparing the results across panel groups, it is observed that government expenditure is contributes to lower saving in both groups of countries with larger impact in the Developed European countries. On the other hand, GDP contributes to higher saving in both groups of countries. Inflation also leads to higher saving in the Developed group but not in the Developing group.&nbsp;&nbsp; Age dependency ratio is not influential in the Developed group but might trigger lower saving in the Developing group.</p> 2021-06-09T05:04:11+00:00 Copyright (c) 2021 Kıvanç Halil Arıç | Siok Kun Sek https://www.journals.vu.lt/ekonomika/article/view/21671 The Impact of Globalization on European Airline Market 2021-04-23T09:24:29+00:00 Anastasiia Kuz anastasiia.kuz@evaf.stud.vu.lt Algirdas Miskinis algirdas.miskinis@evaf.vu.lt <p>Airline industry is very important for modern society as the biggest player in the globalization process by connecting regions, promoting global trade and tourism, facilitating economic and social development. However, here is a lack of research on relationship between globalization and airline industry in Europe. It remains unclear how to measure the impact of globalization on performance of airline companies and industry. The article aims at investigation of the impact of globalization on operational and financial performance of European airlines before pandemics.<br>The authors applied a nonexperimental quantitative research design to analyze the relationship between independent globalization variables (level of globalization in Europe, globalization opportunity, globalization threat) and dependent airlines’ operational and financial performance indicators. Research is done using secondary data from annual reports of 19 European airlines members of European Common Aviation Area (ECAA). The panel data analysis was applied for 2007–2017 with multiple regression analysis using STATA. The results show that globalization exerts a significant positive effect on operational performance. On financial performance only revenue per passenger kilometers is positively influenced by globalization. Globalization affects low-cost airlines and full-service airlines performance differently.</p> 2021-04-22T12:45:57+00:00 Copyright (c) 2021 Anastasiia Kuz | Algirdas Miskinis https://www.journals.vu.lt/ekonomika/article/view/22544 Modelling of the Dependencies of Industrial Development on Marketing Efficiency, Innovation and Technological Activity Indicators 2021-04-23T09:24:30+00:00 Olha Ilyash oliai@meta.ua Ruslan Lupak economist_555@ukr.net Taras Vasyltsiv tgvas77@ukr.net Olena Trofymenko o.o.trofymenko@gmail.com Iryna Dzhadan iryna.dzh@gmail.com <p>This study is relevant due to the multidimensionality and interdependence of industrial development and the indicators of innovation and technological activities and marketing efficiency. The use of economic and mathematical modelling of dependencies between key macroeconomic parameters of the national economy development made it possible to qualitatively analyse the impact of the indicators of marketing efficiency, innovation and technological activities on the parameters of industrial development. The influence of the volume of financing for innovation activity, the introduction of new technological processes and the volume of production of innovative types of products on the change in the volume of sold industrial products is econometrically taken into account. The multidimensionality of the dependencies of choosing an effective model of the dependence of the volume of sold industrial products on the factors in innovation and technological activities was the reason for building a power model. The uniqueness of using an integrated model of the dependencies of innovation and technological activities and industrial development lies in taking into consideration latent factors that influence changes in industrial production, including funding for innovation in the country’s industrial sector, the number of new technological processes and the level of mastering the production of new innovative types of products. The effectiveness of the study is explained by the fact that the selected system of indicators and dependencies helped to identify a number of risks to Ukraines’ industrial development, for example, a critical decline in innovation and technological activities of industry.</p> 2021-04-22T12:33:58+00:00 Copyright (c) 2021 Olha Ilyash | Ruslan Lupak | Taras Vasyltsiv | Olena Trofymenko | Iryna Dzhadan https://www.journals.vu.lt/ekonomika/article/view/23069 Alcohol Availability Restriction Policy and Changes in Consumer Behavior in Lithuania in 2016–2019 2021-03-30T08:02:03+00:00 Vita Karpuškienė vita.karpuskiene@evaf.vu.lt <p>To reduce alcohol consumption, in 2018 the Lithuanian Government introduced new restrictions on alcohol sales time, consumer age, and alcohol advertising. These restrictions apply to the entire population, regardless of alcohol consumption behavior. Such actions of the government were provoked by the scale of the problem; according to the data provided by the World Health Organization and the European Union Commission, Lithuania sits among the leading countries in alcohol consumption.<br>The policies taken by the government to reduce alcohol consumption are described by many economists as paternalistic, as they reduce an individual’s freedom of decision. The aim of this paper is to evaluate the changes in alcohol consumption behavior after the regulatory measures entered into force and the public attitude towards these measures based on research results.<br>This article presents the results of a study first conducted in December 2016 by the researchers of the Faculty of Economics of Vilnius University and the representatives of the Lithuanian Business Confederation<sup xml:lang="en-GB">*</sup>. The aim of the study was to distinguish the different groups of alcohol consumers and their alcohol consumption behavior and attitudes towards the alcohol restriction policies.<sup xml:lang="en-GB">**</sup>&nbsp;To achieve this aim, an analysis of scientific papers, a population survey, and statistical analysis methods were used.<br>The authors conclude that alcohol restriction policies, met with a relatively favorable public attitude, may have adjusted levels of alcohol consumption and its patterns, but the increase in the number of young people among alcohol consumers is not in line with the expected policy outcomes. The measures adopted did not encourage respondents to give up alcohol in the longer term (12 months).</p> 2021-03-29T00:00:00+00:00 Copyright (c) 2021 Authors https://www.journals.vu.lt/ekonomika/article/view/22988 Macroeconomic Uncertainty and Empirical Research Results of its Quantitative Measurement in Georgia 2021-03-30T08:01:36+00:00 David Kbiladze tamar.kbiladze@tsu.ge Shorena Metreveli tamar.kbiladze@tsu.ge Tamar Kbiladze tamar.kbiladze@tsu.ge <p>The present article describes the approaches and definition of the concept of uncertainty proposed by its authors, a quantitative evaluation of uncertainty, and materials of the empirical study used to explore the said issues on the example of macroeconomics of Georgia. We hope that the views given in the article will be useful for developing countries, particularly for the economic policy-makers in the post-communist states, as well as for the academic and scientific circles engaged in the studies of the above-listed issues.</p> 2021-03-25T13:54:52+00:00 Copyright (c) 2021 David Kbiladze | Shorena Metreveli | Tamar Kbiladze https://www.journals.vu.lt/ekonomika/article/view/21194 Negative Real Balance Effects in the Presence of Involuntary Unemployment 2021-04-08T10:20:58+00:00 Yasuhito Tanaka yatanaka@mail.doshisha.ac.jp <p>We examine positive or negative real balance effect (or so-called Pigou effect) by falls in the nominal wage rate and the prices of the goods in situations where there is involuntary unemployment using a three-generations overlapping generations model with childhood period and pay-as-you go pension system for the older generation consumers. We will show that if the net savings of the younger generation consumers are larger than their debts due to consumption in their childhood period, there exists positive real balance effect and the employment increases by a fall in the nominal wage rate; on the other hand, if the net savings of the younger generation consumers are smaller than their debts, there exists negative real balance effect and the employment decreases by a fall in the nominal wage rate.</p> 2021-03-25T13:51:21+00:00 Copyright (c) 2021 Yasuhito Tanaka https://www.journals.vu.lt/ekonomika/article/view/20946 A First Glance at the Minimum Wage Incidence in Lithuania Using Social Security Data* 2021-03-30T08:02:56+00:00 Jose Garcia-Louzao jgarcialouzao@lb.lt Linas Tarasonis linas.tarasonis@evaf.vu.lt <p>This document explores the incidence of the minimum wage in Lithuania. The descriptive analysis exploits high-frequency data on monthly labor income coming from Social Security records between July 2013 and July 2020 to characterize (i) the evolution of the monthly minimum wage, (ii) the percentage of workers who earn the minimum wage, (iii) the bite of the minimum wage in the wage distribution, and (iv) the heterogeneity of the findings with respect to gender and age. The evidence shows that the minimum wage was raised 7 times with an average (real) increase of 7.3% and, on average, less than 10% of the workers earn at most the minimum wage but low-pay incidence is around 20%. In terms of the impact of the wage distribution, the minimum wage relative to the average wage in the economy fluctuates between 45 and 50 percent. Females and young workers exhibit a larger low-pay incidence and minimum wage bite.</p> 2021-03-25T13:50:34+00:00 Copyright (c) 2021 Jose Garcia-Louzao | Linas Tarasonis https://www.journals.vu.lt/ekonomika/article/view/21175 Conditions for Successful Active Investment in Terms of the State and the Far-sighted Interests of the Business 2021-03-30T08:00:41+00:00 Yuriy Vasylenko yuvas4009@gmail.com <p>For the macro characteristic of active investment, we introduced the concept of the technical productivity of investment. It characterizes an investment’s capacity to reduce the norm of material or labor costs.<br>Based on the technical productivity of investment, we derived the equation (not identity) of economic dynamics.<br>We have proposed measuring the efficiency of investments by added-value to reflect their effectiveness for the business owner’s far-sighted interests in minimizing the turnover of skilled workers. We have proposed to use the criteria in terms of the state&nbsp;– the maximum of the real GDP growth and the maximum of the sum of real GDP for the country as a whole.<br>We defined the limits of an investment’s technical productivity, for which the investor receives the desired payback or effectiveness, and an economy in maximal development.<br>For this, we used our causal simulation model of Ukraine’s economy dynamics, which, in contrast to the known models, reflects the main types of legal and shadow economic activities in their relationships.</p> 2021-03-25T13:48:21+00:00 Copyright (c) 2021 Yuriy Vasylenko