Ekonomika https://www.journals.vu.lt/ekonomika <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> en-US <p>Please read the Copyright Notice in&nbsp;<a href="http://www.zurnalai.vu.lt/ekonomika/journalpolicy">Journal Policy</a>.&nbsp;</p> vincas.giedraitis@ef.vu.lt (Vincentas Giedraitis) vigintas.stancelis@kf.vu.lt (Vigintas Stancelis) Mon, 06 Sep 2021 09:59:40 +0000 OJS http://blogs.law.harvard.edu/tech/rss 60 Poverty Dynamics in Turkey: A Multinomial Logit Model https://www.journals.vu.lt/ekonomika/article/view/20622 <p>The availability of longitudinal data allows researchers to analyse the dynamics of poverty. By using the Turkish Statistical Institute’s (TurkStat) Income and Living Conditions Survey micro dataset, we analyse the households’ long-term monetary poverty conditions. We categorise poverty as transitory and chronic and employ the multinomial logit method to analyse determinants of each types of poverty. Results indicate that education and household size are the most effective factors for reducing transitory poverty, and for chronic poverty, the most effective factors are having a regular job and having a skilled occupation; insurance, home ownership, and number of children are important determinants for both types of poverty.</p> Senem Çakmak Şahin | İbrahim Engin Kılıç Copyright (c) 2021 Senem Çakmak Şahin | İbrahim Engin Kılıç https://creativecommons.org/licenses/by/4.0 https://www.journals.vu.lt/ekonomika/article/view/20622 Wed, 13 Oct 2021 13:34:18 +0000 Evaluation of Stackelberg Leader-Follower Interaction Between Policymakers in Small Open Economies https://www.journals.vu.lt/ekonomika/article/view/22680 <p>The problem of coordination between policymakers seems to have created fundamental problems related to economic and social costs, targeted inflation, potential growth, and a high budget deficit. To resolve these problems in this framework, it is important to see the results of the interaction between policymakers and to propose an optimal policy strategy. In this study, the interactions between monetary and fiscal policymakers are examined game theoretically within the framework of the New Keynesian model. The strategic interaction between these policymakers is assessed using the DSGE (Dynamic Stochastic General Equilibrium) model for a small open economy. From this point of view, the interaction between policymakers is assessed within the framework of hypothetical scenarios. The optimal monetary and fiscal policies for a small open economy are derived from the leader-follower mechanism solution known as the Stackelberg solution. Optimal Stackelberg policy rules derived for a small open economy contribute to the literature of economics. The performance of the game theoretically derived optimal policy rules is evaluated through dynamic simulation within the framework of counterfactual experiments. The parameters developed for the model are calibrated for the Turkish economy. Dynamic simulation of the models, the impulse response functions, and the social loss analysis shows that the optimal policy mix for the Turkish economy is when the monetary policymaker is the leader, and the fiscal policymaker is the follower.</p> Metin Tetik | Reşat Ceylan Copyright (c) 2021 Metin Tetik | Reşat Ceylan https://creativecommons.org/licenses/by/4.0 https://www.journals.vu.lt/ekonomika/article/view/22680 Fri, 08 Oct 2021 11:04:50 +0000 Estimates Of Russia’s Potential Output https://www.journals.vu.lt/ekonomika/article/view/22609 <p>Taking into consideration the specifics of the Russian economy such as dependency on oil and gas drilling &amp; production, and including the current context of the Western sanctions, COVID-19 pandemic, as well as somewhat idiosyncratic potential output development, the main aim of this paper is to quantify recent output gap for Russia. We use three mainstream methodologies: the Hodrick-Prescott filter as a benchmark, the Kalman filter to follow, and the Cobb-Douglas production function. The sample time span ranges from 1995Q1 until 2020Q3, while all calculations are performed on quarterly frequencies. The analysis suggests that given low fixed investment ratios, limited R&amp;D spending in non-military sectors, and adverse demographic development, under a “no policy change” scenario there might soon be even more downward pressures on the country’s potential output growth, and the economy may continue increasing only at a snail’s pace even after a possible withdrawal of the Western sanctions and the end of the COVID-19 pandemic.</p> Martin Janíčko | Petr Maleček | Pavel Janíčko Copyright (c) 2021 Martin Janíčko | Petr Maleček | Pavel Janíčko https://creativecommons.org/licenses/by/4.0 https://www.journals.vu.lt/ekonomika/article/view/22609 Fri, 08 Oct 2021 10:56:26 +0000 Fiscal Policy as a Solution to Involuntary Unemployment https://www.journals.vu.lt/ekonomika/article/view/23837 <p>We show the existence of involuntary unemployment based on consumers’ utility maximization and firms’ profit maximization behavior under monopolistic competition with increasing, decreasing or constant returns to scale technology using a three-periods overlapping generations (OLG) model with a childhood period as well as younger and older periods, and pay-as-you-go pension for the older generation, and we analyze the effects of fiscal policy financed by tax and budget deficit (or seigniorage) to achieve full-employment under a situation with involuntary unemployment. Under constant prices we show the following results. 1) If the realization of full employment will increase consumers’ disposable income, in order to achieve full-employment from a state with involuntary unemployment, we need budget deficit (Proposition 1). 2) If the full-employment state has been achieved, we need balanced budget to maintain full-employment (Proposition 2). We also consider fiscal policy under inflation or deflation. Additionally, we present a game-theoretic interpretation of involuntary unemployment and full-employment. We also argue that if full employment should be achieved in equilibrium, the instability of equilibrium can be considered to be the cause of involuntary unemployment.</p> Yasuhito Tanaka Copyright (c) 2021 Yasuhito Tanaka https://creativecommons.org/licenses/by/4.0 https://www.journals.vu.lt/ekonomika/article/view/23837 Fri, 08 Oct 2021 10:47:53 +0000 Financial Innovation and Technology after COVID-19: a few Directions for Policy Makers and Regulators in the View of Old and New Disruptors https://www.journals.vu.lt/ekonomika/article/view/20573 <p>Innovation and technology have led to the redefinition of business models and development of new ones in many bricks and mortar sectors.&nbsp; Similarly, blockchain and fintech have impacted the finance and banking industries and are expected to further affect them in the future, leading some media to coin the expression “Uberization of banking”.&nbsp; The authors extrapolate from sharing economy models to conclude that while blockchain and fintech are poised to advance finance and banking, there are no disruptive features that corroborate the term.&nbsp; By analogy and successive approximations, this article identifies the limitations of the arguments for disruption in finance and banking.&nbsp; Besides, hinging upon stylized facts, the article establishes similarities with sharing economy models to identify potential threats stemming from financial innovations such as Tokenomics, tagged as “no-ABSs”.&nbsp; Eventually, the authors identify entry points and ways forward arising from the COVID-19 pandemic for policy makers and regulators to regain their pivotal role in policing the market and ensuring transparency while driving innovation.</p> Maurizio Pompella | Lorenzo Costantino Copyright (c) 2021 Maurizio Pompella | Lorenzo Costantino https://creativecommons.org/licenses/by/4.0 https://www.journals.vu.lt/ekonomika/article/view/20573 Fri, 08 Oct 2021 10:37:36 +0000 Risky Mortgages and Macroprudential Policy: A Calibrated DSGE Model for Lithuania https://www.journals.vu.lt/ekonomika/article/view/24667 <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> Jaunius Karmelavičius Copyright (c) 2021 Jaunius Karmelavičius https://creativecommons.org/licenses/by/4.0 https://www.journals.vu.lt/ekonomika/article/view/24667 Mon, 06 Sep 2021 10:14:15 +0000 Word Portfolio Optimization in the Environment of Zero Interest Rate https://www.journals.vu.lt/ekonomika/article/view/22568 <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> Darja Demcenko Copyright (c) 2021 Darja Demcenko https://creativecommons.org/licenses/by/4.0 https://www.journals.vu.lt/ekonomika/article/view/22568 Wed, 09 Jun 2021 08:07:11 +0000 Saving Tendency of Developed and Developing European Countries https://www.journals.vu.lt/ekonomika/article/view/21178 <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> Kıvanç Halil Arıç | Siok Kun Sek Copyright (c) 2021 Kıvanç Halil Arıç | Siok Kun Sek https://creativecommons.org/licenses/by/4.0 https://www.journals.vu.lt/ekonomika/article/view/21178 Wed, 09 Jun 2021 05:04:11 +0000 The Impact of Globalization on European Airline Market https://www.journals.vu.lt/ekonomika/article/view/21671 <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> Anastasiia Kuz | Algirdas Miskinis Copyright (c) 2021 Anastasiia Kuz | Algirdas Miskinis https://creativecommons.org/licenses/by/4.0 https://www.journals.vu.lt/ekonomika/article/view/21671 Thu, 22 Apr 2021 12:45:57 +0000 Modelling of the Dependencies of Industrial Development on Marketing Efficiency, Innovation and Technological Activity Indicators https://www.journals.vu.lt/ekonomika/article/view/22544 <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> Olha Ilyash | Ruslan Lupak | Taras Vasyltsiv | Olena Trofymenko | Iryna Dzhadan Copyright (c) 2021 Olha Ilyash | Ruslan Lupak | Taras Vasyltsiv | Olena Trofymenko | Iryna Dzhadan https://creativecommons.org/licenses/by/4.0 https://www.journals.vu.lt/ekonomika/article/view/22544 Thu, 22 Apr 2021 12:33:58 +0000