evaluation of baltic economies' overheating

Document Sample
evaluation of baltic economies' overheating Powered By Docstoc
					 ENTREPRENEURSHIP AND UNIVERSITY -
 SEARCHING HARMONY
 March 15, 2012, University of Tartu


 Mindaugas DAPKUS, Jonė KALENDIENĖ
          Vytautas Magnus University


EVALUATION OF BALTIC
     ECONOMIES’
OVERHEATING: IDEA OF
STRUCTURAL DEVIATION
         Overheating term
• Overheating of an economy occurs
  when its productive capacity is unable to
  keep pace with growing aggregate
  demand.
• In this paper: overheating there are
  imbalances between supply and demand,
  capital and labor and it is followed by
  transformations of production structure
  (structural disbalances)
             Introduction
• Question: how to evaluate the risk of
  economy overheating?
• Level of exploration:
  – Deviation of some indicators related with
    overheating (inflation, current account,
    unemployment,…)
  – GDP Deviation from potential product (HP,
    Kalman filtr)
• Problem: there is no reliable method
  which could help to estimate the fact and
  the moment of economy overheating.
               Structural Convergence and
               overheating evaluation idea
                    100%                         100%

                                      SA*               SD*A
               SA
                           A sector
Actual                                                           Benchmark
economy                                                          : structure
               SB                     SB*               SD*B
structure in               B sector                              of
developing                                                       developed
country                                                          economies
               SC
                           C sector   SC*               SD*C

                     0                      t*    T            Time, t
Estimation steps: methodology
1. Estimation of structural benchmark of
   developed economies (1995-1998)
2. Calculation of average deviation of developed
   economies structure (Denmark, Austria, Finland
   and Norway)
3. Evaluation of initial Structural situation for
   Baltic States (1995-1998)
4. Evaluation of the sustainable development
   benchmark of Baltic States economies during
   1999 – 2010
5. Calculation of the Overheating index for Baltic
   States
            Evaluation of initial Structural
              situation for Baltic States and
                        aspirations
             Baltic States economies' structure 1995-1998
    35.00

    30.00

    25.00

                                                              A-B
    20.00
                                                              C-E
%
    15.00                                                     F
                                                              G-I
    10.00                                                     J-K
                                                              L-P
     5.00

     0.00
               Lithuania    Latvia     Estonia    Developed
Estimation of risk-free structural
   deviation (RF) on the basis of
         developed States
                  1 m
            SD i   SDiC
              *

                  m C 1

                  1 T
            SDiC   SDiCt
                  T t 1

            RFiCt  SDiCt  SDi*

                  RF  9,17
             The sustainable development
              benchmark of Baltic States
                economies 1999 – 2010 *
                                     SD i  S i 0
         S it  S i 0  k i * t
           *
                                ki 
                                                                   TK
        Planed intensity of structural change in
1.20
1.00             Baltic States sectors
0.80
              Lithuania   Latvia       Estonia
0.60
0.40
0.20
0.00
-0.20   A-B        C-E             F             G-I   J-K   L-P        Structural
                                                                        adaptation
-0.40
                                                                           level
-0.60
      n

     Sit  Sit*  RF
     i 1
                           Structural Economy
                 RF     Overheating Index (SOHI)

           Dynamics of Baltic States Overheating index in
    300.00                   1999-2010
    250.00
    200.00                                 Estonia   Latvia    Lithuania

    150.00
%




    100.00
      50.00
          0.00
     -50.00 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999
    -100.00
               Internal structure deviations:
                          Lithuania
           Lithuania's absolut structural deviations
8.00           from benchmark during 1999-2010
6.00
                                                        A-B
4.00
                                                        C-E
2.00                                                    F
                                                        G-I
 0.00
    1998      2000   2002   2004   2006   2008   2010   J-K
                                                        2012
-2.00
                                                        L-P
-4.00

-6.00
         Internal structure deviations:
                     Latvia

         Latvia's absolut structural deviations from
                                                              8.00
                benchmark during 1999-2010
                                                              6.00
                                                              4.00
                                                              2.00
                                                              0.00
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010   -2.00
                                                              -4.00
                                                              -6.00
  A-B    C-E    F     G-I    J-K   L-P
                                                              -8.00
                 Internal structure deviations:
                             Estonia

                       Estonia's absolut structural deviations from
                                                                                       6.00
                              benchmark during 1999-2010
                                                                                       4.00

                                                                                       2.00

                                                                                       0.00
1999     2000   2001    2002   2003   2004 2005     2006   2007   2008   2009   2010
                                                                                       -2.00

                                                                                       -4.00
       A-B      C-E     F      G-I     J-K    L-P
                                                                                       -6.00
                      The future…?

40.00     Baltic States economies' structure in 2010
35.00
30.00
                                                               A-B
25.00
                                                               C-E
20.00                                                          F
15.00                                                          G-I
10.00                                                          J-K
 5.00                                                          L-P
 0.00
        Lithuania     Latvia       Estonia   Developed 2004-
                                                   2007
 ENTREPRENEURSHIP AND UNIVERSITY -
 SEARCHING HARMONY
 March 15, 2012, University of Tartu


 Mindaugas DAPKUS, Jonė KALENDIENĖ
          Vytautas Magnus University


EVALUATION OF BALTIC
     ECONOMIES’
OVERHEATING: IDEA OF
STRUCTURAL DEVIATION

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:0
posted:6/5/2013
language:Unknown
pages:14