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Discussion Paper Series

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Discussion papers disseminate economic research relevant to the tasks and functions of the Bank of Lithuania and of the European System of Central Banks. One of the main objectives of the series is to deepen the understanding of policy-relevant questions and stimulate more in-depth expert discussions by offering a more rigorous analysis of an issue under review. The research featured in the Discussion Paper Series provides a theoretically and empirically founded basis for policy-making. Discussion papers help to develop and strengthen collaboration between the Bank of Lithuania and other central banks, Lithuanian and foreign institutions acting in the fields of economic policy, analysis and/or research.

Papers are only available in English.

No 22
2020-10-21

An analysis of investments and their drivers in Lithuania

  • Abstract

    The article analyzes recent developments in investments in Lithuania using a broad set of possible drivers, including EU funds. We apply a Bayesian VAR setup with data from 1997Q1 to 2019Q4. We also examine and compare business vs. government investments and different types of investments, especially innovative investments. We find that total investments are basically driven by the data on business investments. The main outcomes are mostly in line with the literature, but we do see some crucial differences across types. Key results include: (1) a small role for lending rates as compared to other factors, largely limited to the global financial crisis; (2) the crucial role of demand-side variables, i.e. foreign demand or private consumption; (3) pro-cyclicality in government investments and a positive correlation with business investments; (4) the importance of uncertainty for some sectors, that positively drives only the more innovative/intangible investments; and (5) despite the fact that EU funds do feed investments, there is a crowding-out in the short run for business-related investments, while there is some positive contribution to public investments.

     

    JEL Codes: E32, D24, D61, C32.

    The views expressed are those of the author(s) and do not necessarily represent those of the Bank of Lithuania.

No 21
2020-07-22

The persistently high rate of suicide in Lithuania: an updated view

  • Abstract

    This article examines possible factors related to the rate of suicide in Lithuania, which is the highest in Europe and one of the highest worldwide. Using statistical methods, we select possible determinants from the literature in the fields of economics, psychology and sociology. We look at annual data from 1994 to 2016 for the Baltic States, with a specific focus on Lithuania. The main factors linked to suicide in the region seem to be GDP growth, demographics, alcohol consumption, psychological factors and global warming. For Lithuania in particular, other macroeconomic variables (especially linked to the labor market) may matter. The percentage of rural population does not seem to be a key robust factor.

    JEL Codes: I15, I31, J11, J17, O15.

    The views expressed are those of the author(s) and do not necessarily represent those of the Bank of Lithuania.

No 20
2020-06-01

Relevance of Sovereign Bond Valuations Topic in the Speeches of ECB Officials

  • Abstract

    The aim of this paper is to assess how relevant is the topic of sovereign bond valuations in official ECB Executive Board member speeches and, in particular, under what circumstances do ECB officials begin communicating the driving factors of sovereign bond pricing. For this purpose, we downloaded over 2000 public ECB Executive Board member speeches and applied various text mining techniques. The visual analysis revealed that the importance of the topic of sovereign bond pricing and related risk factors in ECB officials’ speeches has greatly fluctuated over time. The main structural break points were linked to the financial market turbulences, but this topic, possibly due to the introduction of sovereign bond purchases, remained relatively popular even after stress episodes. The linkages between the publicly communicated terms of sovereign bond pricing and related risk factors were rather complex and change in respect to the market situation. Meanwhile, the sentiment balance of the credit risk factor was usually on the negative side, while the ones of other terms were much more neutral.

    JEL Codes: C80, E43, E58, G12.

    The views expressed are those of the author(s) and do not necessarily represent those of the Bank of Lithuania.

No 19
2020-05-19

Household Wealth and Finances. Results for Households in Lithuania for 2017

  • Abstract

    This paper reports new data on the household balance sheet and the consumption situation in Lithuania. It uses a unique Household Finance and Consumption Survey (HFCS) dataset, which collects detailed information about different asset classes and outlines the composition of the household balance sheet in Lithuania. At 93.2%, the homeownership rate in Lithuania is the highest in Europe. Real assets correspond to the highest share of households’ wealth and generate a median net wealth of 46 000 €. Lithuanian households participate poorly in financial assets, with only deposits and individual insurance/pensions generating more significant aggregate values. Household participation in debt markets is also limited in Lithuania, with only 11.7% of households having some mortgage-based liabilities. Lithuanian households spend a significant share of their income on food and utilities. This share is among the highest in Europe. A large number of Lithuanian households can be characterized as "hand-to-mouth" households, as they own a significant amount of wealth in illiquid real estate and very little wealth in liquid financial assets.

    JEL Codes: D1, D3.

    The views expressed are those of the author(s) and do not necessarily represent those of the Bank of Lithuania.