BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 13/2004:
The Lithuanian block of the ESCB multi-country model
Igor Vetlov ()
Abstract: This paper presents preliminary results of modelling the
Lithuanian block of the ESCB Multi-Country Model, LT_MCM. The theoretical
structure of the LT_MCM is in line with most current mainstream macro
models, i.e. supply factors determine the long-run equilibrium, while
output is demand determined in the short run. Starting with a brief
overview of the common features and main building blocks of a typical MCM
country model block, we report the preliminary results of estimation of the
Lithuanian MCM block. To illustrate the main characteristics of the
estimated model, some standard shocks are introduced in the model and the
responses studied. Compared to other MCM country blocks, we find that the
Lithuanian macro model is characterised by relatively large and rapid
response to shocks. Model simulation reveals that, compared to domestic
prices, GDP is more responsive to shocks in the short run, while investment
on average is more volatile than private consumption. The latter findings
are similar to those reported for other EU country macro models.
Keywords: macro model; Lithuania; (follow links to similar papers)
JEL-Codes: C50; E10; E13; (follow links to similar papers)
66 pages, June 28, 2004
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