The Impact of Excise Tax Increases on Ethyl Alcohol Sales in Lithuania

This article provides empirical evidence that the demand for ethyl alcohol in Lithuania is price elastic and the root cause of this elasticity is the competition between Lithuanian and Polish sellers. The basis for the emergence of competition lies in the price differences between the countries, which arise as a direct consequence of the Lithuanian government’s policy in the alcohol sector, which is directed towards reckless increases in excise duties. The increase in Lithuanian excise duties leads to a wider price gap between countries and in the first months after the increase results increases in prices. In subsequent months, Lithuanian importers and manufacturers tend to revise the assortment and costs, replacing more expensive goods with cheaper ones or slightly alter the markups. These changes are the main reason why demand in the domestic market gradually recovers. The price elasticity of demand predetermines the gradual recovery of the ethyl alcohol market, but each increase in excise duty reduces the manufacturers’ markups and (or) leads to the changes in product range, where higher-costs products are displaced by lower-cost products

Exchange Market Pressure and Monetary Policy: The Turkish Case

The purpose of this study is to determine the relationship between monetary policy and the exchange market pressure index in Turkey for the 2002–2018 period with monthly data. To obtain the foreign exchange market pressure index, this study uses the model developed by L. Girton and D.E. Roper and is based fundamentally on the monetary approach to exchange rate determination and the balance of payments. The calculated exchange market pressure index is in accordance with the developments lived in financial markets and changes in monetary policy during the period under investigation. As for the relation between exchange market pressure index and monetary policy, a VAR model was set up and a Granger type causality analysis was carried out. According to Granger causality test results, there is a unidirectional causality running from domestic credit expansion to exchange market pressure and from domestic credit expansion to interest rate differential while there is a bidirectional causality between exchange market pressure and interest rate differential. Since increasing exchange market pressure means a depreciation of the Turkish Lira, the estimated VAR model’s results support the view that the Central Bank will increase the interest rate to temper the exchange market pressure

Risky Mortgages and Macroprudential Policy: A Calibrated DSGE Model for Lithuania

Following the financial crisis of 2009 there was an emergence of macroprudential policy tools, as well as a need to model the macroeconomy and the financial sector in a coherent framework. This paper develops and calibrates a small open economy DSGE model for Lithuania to shed some light on the interactions between the macroeconomy and the banking sector, regulated by macroprudential policy. The model features housing market, and endogenous credit risk a la de Walque et al. (2010), whereby the household can default on mortgage repayments, what leads to housing collateral seizure. Foreign-owned banks, that are subject to risk-sensitive macroprudential capital requirements, take into account not only the mortgage default rate but also the cap on loan to value (LTV) ratio when making lending decisions. Using this mechanism, we show that while a more stringent LTV constraint reduced credit demand, it can also lead to an expansion in credit supply via lower credit risk. Therefore, a tightening of LTV requirement should result in only a slight reduction in mortgage lending, coupled with lower interest rate margins. The article compares the impact of the tightening of three macroprudential tools, namely, bank capital requirements, mortgage risk weights and LTV limit. We find that broad-based capital requirements, such as the counter-cyclical capital buffer, are less efficient in leaning against the housing credit cycle, because of a relatively large cost incurred on the firm sector

Factors Impacting Airport Performance: the Case of Prishtina and Tirana

[full article and abstract in English] The market liberalization, airport privatization and increased number of low-cost carriers have significantly affected airport performance lately. The aim of this study is to determine and analyze passengers’ demographics and their interaction with the external macro environment by providing empirical evidence of their impact on airport performance. The combined two-group proportion test and loglinear analysis were applied as the main analytical methods, whereas a PESTEL analysis was used as an auxiliary tool to help explain quantitative findings. The results show that due to a large diaspora and difficult socioeconomic situation, there is a gap for more direct point-to-point flights offered by the low-cost carriers in general and, more specifically, if more direct flights are being offered from Prishtina Airport, their likelihood ratio is to increase twice in its absolute value, whereas in Tirana Airport, their likelihood ratio is to increase twice if they offer more connection flights. This confirms the conclusion that there is a gap for additional services to be provided, which could significantly affect the airport performance in return. In the end, this study also raises a new hypothesis: whether the younger generation of the diaspora, members of which were born and educated abroad, will negatively affect airport performance due to their decreasing tendency and interest to visit the homeland of their parents

The Initial Impact of The Covid-19 Pandemic on Older Workers in Lithuania

 The Covid-19 pandemic that began in 2020 presented a new challenge for the labor market participants. This paper discusses the Covid-19 pandemic, highlighting the key challenges that older people can face trying to stay in the labor market for longer in the future, especially if such pandemics continue. Binary response models are used to identify the push-and-pull factors determining the impact of the Covid-19 pandemic on the employment of people aged 55–64 during the pandemic in Lithuania. As the Covid-19 pandemic still continues, most of researchers prefer statistical analysis, comparing employment rates with those of the 2009 economic crisis, to determine the potential impact of the pandemic on employment or by only theoretically discussing the potential impact of the pandemic on the elderly. This paper models the impact of the pandemic on the employment of older people in Lithuania using unique administrative micro-data of State social insurance fund (SSIF). This allows to draw deeper conclusions about how the pandemic affects workers aged 55–64 in Lithuania. The results show that the employment of older people has not been disproportionately impacted by the Covid-19 pandemic, and if such pandemics occur in the future, they may present both limitations and opportunities from the point of view of older people

Financial Inclusion, Poverty, and Income Inequality: Evidence from European Countries

This study contributes to the existing literature on financial inclusion by examining the determinants of financial inclusion and studying the impact of financial inclusion on poverty reduction and income inequality in European countries. We investigate the impact of financial inclusion on poverty and income inequality in 30 European countries during 2004-2019 based on a composite financial inclusion index (FII) constructed by using principal component analysis (PCA). Then we assess the impact of financial inclusion, on poverty and income inequality, by employing the fixed effect method. The estimates reveal that, for the European countries, GNI per capita, population density, inflation, and internet users have a positive and significant impact on financial inclusion across all the regressions. Rule of law has a positive impact on financial inclusion, and the age dependency ratio has a negative impact on financial inclusion. The findings also indicate that financial inclusion is significantly correlated with lower poverty for the full sample. Lastly, the present study supports the role of financial inclusion in reducing income inequality in European countries

Time-Varying and Quantile-Based Relationship among Geopolitical Risks, Oil and Gold Prices

This paper probes the relationship between geopolitical risks (GPR), WTI oil, and gold prices utilizing the time-varying causality and quantile regression approaches. The sample period spans from January 1986 to January 2022, comprising 433 monthly observations and representing the longest common period of data availability. The results show that there is no causality between the pairs of GPR–WTI, and GPR–gold prices for the full sample period, while the causality between gold and WTI is unidirectional, running from gold to WTI. Using the rolling causality test, however, the findings show that the dynamic causal relations strengthen over time. The Granger causality from the gold prices to GPR and WTI is stronger than the other way around, suggesting that the gold market dominates the other two variables in terms of strength of the lead-lag structure of causality. Besides, the findings reveal the strongest causation effects between GPR and WTI spot prices. Before 2009, the causal relationship between WTI and GPR is mostly unidirectional while also a bidirectional linkage emerges, coinciding with the crisis periods including the Dot-Com and 2007 US Subprime crises. During the causal periods, these variables respond negatively to changes in others. For the COVID19 period, the direction of causality considerably changes in favor of WTI for the GPR–WTI pair whereas it is unchanged for the WTI–gold pair. The results indicate that WTI has positive and negative predictive powers for GPR and gold while it receives negative and positive causation effects from GPR and gold during the pandemic, respectively. The results, in overall, may offer important insights for investors and regulatory authorities in building portfolio and risk management strategies as well as pricing and trading activities and constructing monetary policies over various market conditions

Cracking the Wealth Puzzle: Investigating the Interplay of Personal Finance, Expenditure Behavior, and Financial Management

This paper investigated the wealth puzzle by examining the relationships among personal finance (PF), expenditure behavior (EB), and financial management (FM). Data from a diverse sample of 2000 individuals across regions such as Kosovo, Ghana, Kenya, Nigeria, Turkey, Pakistan, Nepal, Uganda, Cameroon, Ethiopia, India, Indonesia, Albania, Oman, and Egypt were collected through an online questionnaire from 2023 to 2024, and processed through exploratory and confirmatory factor analyses using AMOS and SPSS programs. Results revealed the robust relationships among PF, EB, and FM, indicating their resilience and strong internal consistency, and underscoring their pivotal role in shaping individuals’ financial stability and well-being. Notably, EB emerged as a crucial determinant, highlighting the importance of aligning spending habits with family priorities, moderating excesses, and consistently reviewing for improvements. Moreover, critical variables within PF and FM underscored the necessity for strategic financial planning, efficient spending optimization, and the cultivation of resilience against unforeseen financial obstacles. This research has significantly advanced the understanding of wealth dynamics and provided practical insights for policymakers and educators to design targeted financial education initiatives that can improve financial well-being and long-term prosperity. Future research should concentrate on understanding underlying mechanisms and assessing intervention effectiveness across more variables and countries

Foreign Exchange Volatility and the Bubble Formation in Financial Markets: Evidence From The COVID-19 Pandemic

This paper applies recursive right-tailed unit root tests to detect bubble activity for Turkish Lira against financially most-traded five currencies (i.e., the US Dollar (USD/TRY), the British pound (GBP/TRY), the Euro (EUR/TRY), the Chinese Yuan (CNY/TRY) and the Russian Ruble (RUB/TRY)) over January 2, 2015 to February 12, 2021. It can be identified from the Supremum Augmented Dickey–Fuller (SADF) and the Generalized Supremum Augmented Dickey-Fuller (GSADF) tests statistics that there is a high degree of evidence of bubble activity which characterizes all five exchange rates both in the full-sample period and in the sub-periods, including the pre-COVID-19 era (January 2, 2015 to November 15, 2019) and the COVID-19 era (November 18, 2019 to February 12, 2021). The empirical results also indicate that positive bubbles are common for each selected exchange rate and the multiple bubbles were intensified during the COVID-19 period, referring that forex markets became relatively more inefficient compared to the pre-COVID-19 period

Exploring the Tourism-Poverty Alleviation Nexus in the Brics Groupof Nations

The tourism-poverty alleviation nexus is becoming an increasingly significant subject of academic inquiry within the tourism economics discourse. Using time series data from the World Bank (1995–2017) in a P-ARDL model, the present study explores the relationship between tourism (receipts from exports, the travel subsector, hospitality and accommodation subsector) and poverty alleviation (final household consumption) with tourism arrivals as the control variable within the context of the BRICS group. The results suggest that receipts from the travel subsector and exports met the a priori expectation – positively influencing poverty alleviation within BRICS nations in the long run. Contrastingly, receipts from the hospitality and accommodation subsector did not meet the a priori expectation of a positive sign, with the results indicating statistical insignificance in the long run. However, receipts from the hospitality and accommodation were found to only influence poverty alleviation in the short run. Relatedly, the results suggest that increases in consumption associated with growth in tourism arrivals did not influence poverty in the BRICS. The results point to the heterogeneity of the influence of tourism on poverty alleviation, whereby certain dimensions of tourism contribute to poverty alleviation in the long run and others do so in the short run. Based on these findings it is recommended that BRICS countries harness their tourism potential and promote intra-BRICS tourism to maximise the positive impact of travel and tourism export receipts on household consumption, which catalyses poverty alleviation