News

You are kindly invited to attend the Eesti Pankʼs research seminar in Webex on 7 November at 11:00 am. During this seminar, Francesca Loria (Board of Governors of the Federal Reserve System) will present on “Flexible Priors and Restrictions for Structural Vector Autoregressions”. 

This study introduces an innovative approach for estimating Bayesian vector autoregressions (VAR) in structural form, enhancing flexibility in incorporating various priors and identification strategies. The method accommodates zero, sign, and narrative restrictions, as well as identification via proxy variables, offering a unified framework for replicating prominent strategies in the VAR literature. Unlike existing methods, it directly elicits informative priors and restrictions on structural parameters, ensuring transparency and avoiding unintended beliefs. The approach is versatile, scalable to larger models and eliminates the need for separate algorithms for different identification schemes. By employing endogenous priors, it overcomes issues related to non-uniform priors over identified sets, extending beyond impulse responses. Additionally, the methodology allows for imposing (in-)equality restrictions on VAR parameters, providing a robust means to incorporate strong beliefs. Overall, this user-friendly framework addresses key challenges in the current literature, offering a valuable tool for empirical researchers, with the method accessible through the RISE toolbox.

Co-authors of the paper:
Christiane Baumeister (University of Notre Dame) and Junior Maih (Norges Bank)

Meeting information in Webex:
https://eestipank.webex.com/eestipank/j.php?MTID=mce3a338ee6164833d9cede1d167df727
Meeting number: 2741 483 6629
Password: dmTBJ3fNE82 (36825336, from phones and video systems)

You are kindly invited to attend the Eesti Pankʼs research seminar in Webex on 17 October at 10:30 am, during which Georg Strasser (European Central Bank) will present on “Inflation heterogeneity across households.”

Systematic inflation differences between households have distributional and welfare effects. Moreover, individual past inflation experiences might affect inflation expectations, so that a heterogeneity of inflation realizations can entail a heterogeneity of inflation expectations. This paper examines inflation heterogeneity across households in France and Germany. It documents large and persistent inflation differences between households, decomposes these differences in price and basket components, and identifies their main drivers. The analysis is based on a large household panel reporting the purchases of fast moving consumer goods, i.e. of the products which households buy most frequently. This set of products is particularly relevant because households form their inflation expectations based on them. The GfK dataset covers German households during the years 2005–2018 and the Kantar dataset French households during 2008–2018, with purchases totalling more than 330 million and 145 million euro, respectively. Both panels contain prices, quantities, and product characteristics of the purchases of households together with some demographic information. This paper presents four key insights. First, income (and other standard demographic characteristics) explain little of the inflation differences between households. The key driver of inflation heterogeneity is household behaviour. Income plays an indirect role: as household behaviour is weakly correlated with income, at times significant inflation differences between income groups emerge. Second, household behaviour affects inflation heterogeneity mainly through product choice. While individual households might find lower prices for a given product, these price differences constitute only a small share of the overall inflation heterogeneity. Only price differences between larger regional units matter, e.g. a different price paid for the same product in a metropolitan region vs. a distant rural region. This translates into inflation heterogeneity at the regional level. Third, the households’ product choice within a category appears to be largely detached from the products’ relative price. In other words, households often substitute into a product whose relative price has increased. Fourth, the dispersion of household-level price indices based on a fixed ex-ante basket changes little when heterogeneous preferences across goods are introduced, and becomes even larger when allowing for time variation in preferences. These findings caution against focusing on income as the sole explanation of inflation heterogeneity among households. Instead, the main driver is household behaviour, in particular product choice. Therefore the heterogeneity of preferences– across goods and over time needs to be taken into account. Preference heterogeneity is also behind the often counterintuitive substitution patterns. In contrast, price search by households and the resulting differences in prices paid for identical products matter relatively little for inflation differences between households.

Co-author of the paper: Regina Kiss (University of Vienna)
ECB working paper: https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2898~29405f932f.en.pdf

Meeting information in Webex:
https://eestipank.webex.com/eestipank/j.php?MTID=m6ff154a8b55755b113c5b9352bab34d1
Meeting number: 2742 055 6638
Password: crC3EJaQP43 (27233527, from phones and video systems)

The third lecture of the J. Stroinovskis lecture series organized by the Bank of Lithuania and Vilnius University will take place on 10^th October. Cecilia García Peñalosa (Aix-Marseille School of Economics, AMSE) will give a lecture on “The Dynamics of Lifetime Earnings” in the TechHub conference hall (2^nd floor).

• Time: October 10, 15.30-17.30
• Venue: TechHub Conference Room (Saulėtekio al.9, 2nd building, 2nd floor)
• Presenter: Cecilia García Peñalosa, Professor of Economics at the Aix-Marseille School of Economics
• Topic: The Dynamics of Lifetime Earnings
• Working language: English

On 26 September at 10:30 am you are kindly invited to attend in Webex the Eesti Pankʼs research seminar in which Simona Malovaná (Czech National Bank) will make the presentation on “Distributional Effects of Borrower-Based Macroprudential Measures”. 

Using household-level survey data on 22 European countries collected in four waves between 2010 and 2022, we document the distributional effects of borrower-based macroprudential measures (BBM). We find that the tightening of the BBM significantly reduces the availability of mortgages for lower-income households, leading to increased reliance on renting. Regulation works not only through the extensive margin by cutting off risky borrowers from the mortgage market, but also through the intensive margin by reducing the average loan amount of households with lower incomes. This reduction in risk has the positive side effect of lower borrowing costs, benefiting mainly households with above-average incomes. The easing of BBM, observed in several countries, does not yet fully reverse these effects.

Co-authors of the paper: Dominika Ehrenbergerová and Zuzana Gric (both Czech National Bank)
Meeting information in Webex:

https://eestipank.webex.com/eestipank/j.php?MTID=mf162bf94d33d516f47dd24bb5374b944

Meeting number: 2744 273 2237
Password: jAfGTrSb226 (52348772, from phones and video systems)

The 52nd Meeting of the European Public Choice Society will take place on 3-5 April 2025 in Riga and is organised by the Stockholm School of Economics in Riga.

The European Public Choice Society promotes scientific research on the economics and politics of public and non-market decision-making, political economy and the economics of institutions. The annual meeting brings together researchers with a shared interest in Public Choice.

Website: https://epcs2025.sseriga.edu/

Keynote speakers: Beata Javorcik, Raphael Frank

Conference fees will be announced later this year, but will be similar to previous EPCS Annual Meetings (350-450 euros for standard fees, reduced fees for PhD students). 

The 13th Annual Lithuanian Conference on Economic Research hosted by Lietuvos Bankas that will be held on 23 December 2024 in Vilnius, Lithuania. The paper submission portal is now open!

This one-day conference takes place every year right around Christmas and provides a forum for Lithuanian economists and their friends to meet each other. We are looking for well-defined research ideas that could benefit from the interactions in a collegial setting. We especially welcome submissions by PhD students and post-doctoral fellows. The conference will cover a broad range of topics in theoretical and empirical economics, including but not restricted to macroeconomics, microeconomics, financial economics, labour economics, and political economy.

More information available at https://meeting2024.econ.lt/

Submission. Please submit full papers or extended abstracts using the following form: https://forms.gle/DnfhuvasGbCmhNJd9

The deadline for paper submissions is November 8, 2024. The submitting authors will be notified by November 22, 2024.

Logistics. The conference will be held in person. The working language of the meeting is English. The conference is also open to researchers who do not plan to present a paper. We especially welcome the Lithuanian and Baltic economics community: postgraduate students, professors, independent experts, economic journalists and government officials. Non-presenting participants should sign up using the form by December 19, 2024: https://forms.gle/NQb4bfS5nwbZYAdP7

Organizers: Audinga Baltrūnaitė (Bank of Italy, CEPR), Žymantas Budrys (Lietuvos Bankas, Vilnius University), Agne Suziedelyte (University of London), Linas Tarasonis (Lietuvos Bankas, Vilnius University), Vytautas Valaitis (University of Surrey), Alminas Žaldokas (National University of Singapore)

The 5^th Lietuvos Bankas (LB), Narodowy Bank Polski (NBP) and the Central Bank Research Association’s (CEBRA) conference “Macroeconomic Adjustments after Large Global Shocks” will take place in Vilnius, Lithuania, on 19-20 September 2024.

Topics of the conference include but are not limited to:

• Macroeconomic and international trade effects of large global shocks
• Shock transmission, adjustment channels and heterogeneity of the effects
• Policy responses to large global shocks
• Global shocks challenges for monetary policy

Organising committee:

Julian di Giovanni (Federal Reserve Bank of New York and CEBRA), Paweł Kopiec (NBP), Andrei A. Levchenko (University of Michigan and CEBRA), Krzysztof Makarski (NBP), Aurelija Proškutė (Lietuvos bankas), Robert Rich (Federal Reserve Bank of Cleveland and CEBRA), Raphael Schoenle (Brandeis University and CEBRA), Swapnil Singh (Lietuvos bankas), Milda Savickaitė (Lietuvos bankas)

Venue: Vilnius County Adomas Mickevicius Public Library, Traku str. 10

Website: Link

Preliminary program: Link

Free registration: Link

The 45th Annual Meeting of the Finnish Economic Association will be held at Tallinn University of Technology (TalTech), Akadeemia tee 3, Tallinn on February 6th and 7th, 2025.

The Finnish Economic Association organizes the event in collaboration with TalTech School of Business and Governance and Department of Economics and Finance. The conference will cover a broad range of topics in economics and finance.

Further information on the conference call and paper submission will follow at the end of October.

During the General Meeting of the Association on 28 June 2024, Oļegs Tkačevs and Karsten Staehr have been voted in and have become new members of the BEA Board. 

Oļegs Tkačevs is a Principal Economist at the Bank of Latvia and a Lecturer at the Stockholm School of Economics in Riga. He is an Associate Editor of the Baltic Journal of Economics. His main research activities include fiscal and structural policies, competitiveness and trade. He teaches International Economics to undergraduate students. In the past, Oļegs represented the Bank of Latvia in the ESCB Working Group of Public Finance. During the Great Recession, he closely cooperated with counterparts from the IMF and EC on fiscal consolidation strategy and recommendations for structural reforms. In 2012 and 2013, he was an NCB expert at the Directorate General Economics of the European Central Bank. Oļegs holds a Ph.D. in Economics from the University of Latvia.

Karsten Staehr is Professor in public and international finance at Tallinn University of Technology and a part-time Research Supervisor at the Bank of Estonia. He holds a master’s degree from the Massachusetts Institute of Technology and master’s and Ph.D. degrees from the University of Copenhagen. He carries out research and policy analysis within macroeconomics, international finance, European integration, fiscal policy, and tax evasion. He is an associate editor of the Baltic Journal of Economics, and he is on the editorial boards of Post-Communist Economies and Panoeconomicus.

Productivity-enhancing reallocation during the Covid-19 pandemic

Working Papers of Eesti Pank 5/2024
Tibor Lalinsky, Jaanika Meriküll, Paloma Lopez-Garcia