Research Seminar of the Department of Economics and Finance of TalTech on 28 February

You are welcome to join the Research Seminar of the Department of Economics and Finance of Tallinn University of TEchnology (TalTech) on Wednesday, 28 February at 16:00-17:00.

In MS Teams, please join via LINK

“What Drives the Recent Surge in Inflation? The Historical Decomposition Roller Coaster”
Fabio Canova (BI Norwegian Business School)

What drives the current inflation surge? To answer, one must decompose observable inflation fluctuations into the contributions due to structural shocks. We document how whimsical an historical shock decomposition can be in standard vector autoregressive models. Neglecting the uncertainty surrounding the deterministic components implies an erratic behavior for shocks over history under general conditions. Our favorite approach to solve the problem, the single-unit-root prior, massively shrinks the uncertainty around the deterministic components. We show that demand shocks are unambiguously the main drivers of the inflation surge in the United States, the euro area and four small open economies.

Keywords: Bayesian vector autoregression, deterministic component, single unit root prior, inflation dynamics
JEL classification: C11, C32, E32
Authors: Drago Bergholt (Norges Bank), Fabio Canova (BI Norwegian Business School), Francesco Furlanetto (Norges Bank), Nicol`O Maffei-Faccioli (Norges Bank), P˚al Ulvedal (Nord University Business School)

Research Seminar of the Department of Economics and Finance of TalTech on 21 February

You are welcome to join the Research Seminar of the Department of Economics and Finance of Tallinn University of Technology (TalTech) on Wednesday, 21 February at 16:00-17:00.

In MS Teams, please join via LINK

“The Zelensky Moment: Arms, Investments and the Russian Invasion”
L.J.R. (Bert) Scholtens (University of Groningen)

We analyze the determinants of European portfolio investments in the international arms industry. We explore a novel database from the ECB with portfolio holdings of investors from 26 countries in the European Union to investigate the role of geographical and political factors in relation to the prolonged conflict between Russia and the Ukraine. We utilize the former Soviet countries, countries that once were part of Yugoslavia, and signatories of the Warsaw Pact, military defense budgets, Google trend, and geographical proximity indicators to understand which factors shape investors’ investments in the arms industry. Using a differences-in-differences approach, we find that following the election of Mr. Zelensky and subsequent political tensions, investors in countries that once were under direct influence of the Soviet Union have substantially increased their holdings in arms stocks as compared to those in other European countries. We establish that especially retail investors show a pronounced response.


Martijn Adriaan Boermans (De Nederlandsche Bank), Rients Galema (Utrecht University – School of Economics), Auke Plantinga (University of Groningen), Bert Scholtens (University of Groningen – Department of Finance & Accounting)

Research seminar of the School of Economics and Business Administration of the University of Tartu on 21 February

On 21 February at 11.00 you are invited to attend the research seminar of the School of Economics and Business Administration of the University of Tartu in which Irakli Barbakadze (University of Cambridge) will present the results of the research project “Political Risk Insurance: The Role of Lobbying Meetings”.

The paper studies how the degree of firms’ disclosed political risk varies with the intensity of lobbying activities. Beyond the traditional rent-seeking mechanism, lobbying can also overcome information asymmetry between firms and policymakers, enabling firms to mitigate their political risk exposure. The paper uses the information on lobbying meetings of UK-based publicly listed firms and their disclosed political risk through quarterly conference call reports and shows that lobbying reduces firm-level political risk. However, the effectiveness of lobbying as a risk-mitigating tool depends on the political risk and lobbying type. The largest effect of lobbying on political risk reduction is documented in the case of risk coming from institutions and political processes, tax policy, or environmental policy. The least effect is observed on trade policy uncertainty. The results also show that group lobbying is relatively more effective than individual lobbying as it is associated with better information transfers from policymakers and other meeting participants. Importantly, lobbying at the highest policy level does not contribute much to political risk reduction. However, targeting lobbying activities to specific government positions matters the most, such as the Economic Secretary and Parliamentary under-secretary. Lastly, the value of lobbying is larger during periods of high economic policy uncertainty when the demand for policy information is high.

Zoom meeting

Meeting ID: 944 7113 7084
Passcode: 730945

Research seminar at Eesti Pank on 22 February

On 22 February at 10.30 you are kindly invited to attend an Eesti Pank research seminar in which Nicolas Gavoille (SSE Riga) will present the results of the research project “Off the books, on the books? Employment, wages, and labor tax audits”. 

The paper studies firms’ employment and wage response to labor tax audit. Using monthly-frequency administrative data from Latvia, where payroll tax evasion is prevalent, we show that the impact of audits on firms’ reporting behavior is short-lived. Firm-level average reported wages and employment substantially increase during the audit period, indicating the regularization of undeclared workers. However, after the conclusion of the audit, wages and employment significantly decline vis-à-vis the pre-audit period. Employee-level results reveal that changes in the firm’s average wage are driven by newly declared employees, with limited wage adjustments for those officially employed before the audit. This suggests that labor tax audits are an effective tool for detecting undeclared workers but not for detecting wage underreporting.

Meeting information in Webex:

Meeting number: 2740 918 5731

Password: A3NrGEsUq26 (23674378 from phones and video systems)

Deadline approaching: 2nd Baltic Central Banks’ Invited Lecture Series

The deadline to submit papers to participate in the 2nd Baltic Central Banks’ Invited Lecture Series (BCBILS) is on 16 February 2024.

The event takes place on 9-11 April 2024 in Tallinn, Estonia and consists of a training course given by renown macroeconomist Ricardo Reis on topic “How do central banks control inflation? Theory and applications to the recent inflation disaster” and a day of paper presentations related to this topic, for which you are welcome to submit your paper and present it on 10 April 2024 if accepted.

If you are considering to participate, please send your application containing the CV and a copy of the research paper to Liina Kulu ( Please also indicate in your application whether you wish to participate at both events or at the seminar only.

For further information, see here.

External event: 8th International Meeting on Experimental and Behavioural Social Sciences (IMEBESS)

Andris Saulitis (University of Latvia & Collegio Carlo Alberto) along with the EPS Academic welcome you to participate in the Eighth International Meeting on Experimental and Behavioural Social Sciences (IMEBESS) at the University of Latvia, Academic Centre, Riga, Latvia, on 23-25 May 2024.

IMEBESS aims to bring together researchers in all areas of the social sciences who are interested in experimental methods. Both theoretical and empirical papers on topics in all areas of the social sciences, such as experimental and behavioural economics, sociology, political science, and psychology are encouraged.

The organising committee consists of twelve academics from the University of Oxford and a number of European and African universities and business schools.

The deadline for submitting abstracts is 15 February 2024. Authors will receive notification of acceptance by 01 March 2024.

Further information and instructions for submissions are available on the conference web site:

Latvijas Banka’s Research Seminar

Xin Zhang from Sveriges Riksbank is soon coming to Riga to present his paper “The Inflationary Effects of Quantitative Easing” co-authored with Mathias Klein. See the abstract below.

The seminar will take place on February 21, 14:00-15:30, and happen in the hybrid format: both at Latvijas Banka’s premises (Kr.Valdemāra 1B, Vitrāžu zāle) and in Teams.

To connect online, use the this link or enter the following credentials in Teams:

Meeting ID: 390 993 772 092
Passcode: XrEGa4

Abstract: We provide new evidence on the inflationary effects of Quantitative Easing (QE) using Swedish administrative data at the bank, firm, and product level. For identification, we rely on bank-firm lending relationships and the heterogeneous participation rates of banks in the government bond purchase program by the Swedish central bank. Our results show that the bond purchase program led to a significant and persistent increase in producer prices. Importantly, we find that the degree of financial frictions considerably influences firms’ price response: low leverage firms do not change their prices, whereas high leverage firms raise their prices significantly. This divergent pricing behaviour can be rationalized by a significant increase in long-term borrowing and interest rate expenses among high leverage firms. The difference in price responses across high and low leverage firms is less pronounced for exogenous changes in the repo rate implying that the transmission mechanism of QE differs from the one of conventional interest rate policy.

External Event: 12th Meeting of the Nordic Econometric Network

The 12th Meeting of the Nordic Econometric Network will take place in Bergen on 2-4 June 2024. Economists from the Baltic States are also welcome to submit their papers and participate.

Paper submission deadline: 2 April 2024

Conference fee: NOK 1000

Link to more info about the conference and paper submission: Nordic Econometric Meeting – NEM 2024 Registration, Bergen | Eventbrite

The conference is open to both theoretical and applied econometricians from all countries, working in a broad range of fields, including (but not limited to) macroeconomics, financial economics, international economics, industrial organization, labour economics, health economics and spatial economics. Graduate students are particularly encouraged to present their research papers. The local organizers gratefully acknowledges the support from NHH’s fund and from SNF’s fund for applied research.

A central theme for the conference is Machine Learning in Econometrics, and we are delighted to announce the keynote speakers:

Eric Ghysels – Edward Bernstein Distinguished Professor of Economics and Professor of Finance at the University of North Carolina at Chapel Hill

Jonas Peters – Professor of Statistics at ETZ Zürich