The Lithuanian Block of the Escb Multi-Country Model

66 Pages Posted: 18 Sep 2007

Date Written: June 28, 2004

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

JEL Classification: E10, E13, C5

Suggested Citation

Vetlov, Igor, The Lithuanian Block of the Escb Multi-Country Model (June 28, 2004). BOFIT Discussion Paper No. 13/2004, Available at SSRN: https://ssrn.com/abstract=1015239 or http://dx.doi.org/10.2139/ssrn.1015239

Igor Vetlov (Contact Author)

Bank of Lithuania ( email )

Totoriu 4
Vilnius, LT-01121
Lithuania

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