Baltic Journal of Economics

Articles

Vol. 18, No. 1, 2018

Minimum Wages and Employment Retention: A Microeconometric Study for Estonia
1.IntroductionDistributional concerns and poverty alleviation have attracted increased attention since the global financial crisis. Raising the minimum wage may be seen as one way to support low-wage workers, but a key concern is whether it will reduce...
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The Public–private Sector Wage Gap in Latvia
(ProQuest: ... denotes formulae omitted.)1. IntroductionInvestigating public-private sector wage differentials has regained the importance in the context of recent economic crisis when governments across Europe had to engage in considerable consolidation...
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Vol. 17, No. 1, 2017

Implications of the European Integration: Revisiting the Hypothesis of 'Hub-and-Spokes' Model
(ProQuest: ... denotes formulae omitted.)1. IntroductionThe European Union (EU) enlargement scheme based on the Association Agreements (AA or Europe Agreements), inspired Richard Baldwin to postulate the hypothesis predicting the formation of the 'hub-and-spokes'...
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Is the Success of an Issuer an Investor Success? Evidence from Polish IPOs
(ProQuest: ... denotes formulae omitted.)1.IntroductionThe capital market is a place that brings together companies offering investment opportunities - securities - and investors seeking opportunities to best allocate their capital. Shares of initial...
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Non-Performing Loans in Baltic States: Determinants and Macroeconomic Effects
(ProQuest: ... denotes formulae omitted.)1. IntroductionOver the past decade, the credit quality of loan portfolios across most countries in the world remained relatively stable until financial crises hit the global economy in 2007-2008. Since then,...
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Estimation of Energy Productivity Change in Baltic Sea and EU Non-Baltic Sea States
(ProQuest: ... denotes formulae omitted.)1.IntroductionThe Baltic Sea states are endowed with an abundant amount of natural resources, such as hydro-electrical power in Norway, Finland, and Sweden, thermo-energy in Iceland, and crude oil and natural...
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Monetary Policy Transmission: The Case of Lithuania
(ProQuest: ... denotes formulae omitted.)1. IntroductionUnderstanding the monetary policy transmission mechanism in a country's economy is important for central banks seeking price stability and sustainable economic growth. This exercise is relevant...
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Vol. 17, No. 2, 2017

Influence of Internet and Social Media Presence on Small, Local Banks' Market Power
(ProQuest: ... denotes formulae omitted.)1.IntroductionInternet and social media presence (I&SMP) is undoubtedly one of the most important factors that is changing the banking industry. The published studies can be roughly categorized into two groups....
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Editorial
This volume of the Baltic Journal of Economics is the third one published in cooperation with Taylor & Francis. In the foreword to this volume, we would like to emphasize several important changes that were put in place this year and that are essential...
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Forecasting the Estonian Rate of Inflation Using Factor Models
(ProQuest: ... denotes formulae omitted.)1.IntroductionInflation and changes in inflation are key measures of macroeconomic performance, so it follows that forecasting inflation is important in countries around the world, including Estonia. Volatile...
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Randomness or Stock-Flow: Which Mechanism Describes Labour Market Matching in Poland?
(ProQuest: ... denotes formulae omitted.)1.IntroductionIn this study, I identify which theoretical model best describes the matching mechanism occurring in the labour market in Poland. I study three frameworks: random, stock-flow, and job queuing. They...
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An Analysis of the Primary and Secondary Housing Market in Poland: Evidence from the 17 Largest Cities
1.IntroductionGrowth in house prices in the primary market (new construction) and the secondary market (existing housing stock) is the subject of continuous interest of central banks and regulators, as it rapidly translates into changes in real estate...
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Vol. 16, No. 2, April

Fundamental Housing Prices in the Baltic States: Empirical Approach
1. IntroductionAfter the accession to the EU the residential real estate markets of the Baltic States1 experienced a very pronounced boom-bust cycle that greatly exacerbated the consequences of the Global Financial Crisis. Beginning with 2004 easily...
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Should Pension Funds Hedge Currency Risk? the Case of Poland
(ProQuest: ... denotes formulae omitted.)1. IntroductionEvery manager of international assets' portfolio must carefully consider the issue of currency hedging. The exposure on foreign asset volatility can impact the overall portfolio risk in both directions,...
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Firm Exporting and Productivity: What If Productivity Is No Longer a Black Box
(ProQuest: ... denotes formulae omitted.)1. IntroductionSince the ground-breaking study of Bernard and Jensen (1995), which described 'exceptional export performance of firms in the United States', many empirical studies have focused on investigating...
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Investor Education and Trading Activity on the Stock Market
1. IntroductionOne might think that investing on the stock market is a difficult task and therefore the individual would assess one's abilities rationally. The empirical evidence suggests the opposite as the investors tend to oversimplify the situations...
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Vol. 16, No. 1, March

Evaluation of Latvia's Re-Exports Using Firm-Level Trade Data
(ProQuest: ... denotes formulae omitted.)1. IntroductionThe world economy is getting more and more globalized and Latvia is becoming steadily more integrated within it. This makes the analysis of external trade increasingly complicated since the production...
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Measuring Foreign Impact: Leading Index Construction Using Hierarchical Dynamic Factor Model
(ProQuest: ... denotes formulae omitted.)1. IntroductionThe role of globalization is frequently noticed in various topics of economics. Recently, it is increasingly addressed as the underlying cause of diminishing accuracy of traditional domestically...
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Survey Measures of Inflation Expectations in Poland: Are They Relevant from the Macroeconomic Perspective?
(ProQuest: ... denotes formulae omitted.)1. IntroductionThe importance of expectations, including inflation expectations, is perceived as one of the pillars of the consensus on monetary policy prevailing in the central bank community in the years before...
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Vol. 17, No. 1, 2016

Monetary Policy Transmission: The Case of Lithuania
(ProQuest: ... denotes formulae omitted.)1.IntroductionUnderstanding the monetary policy transmission mechanism in a country's economy is important for central banks seeking price stability and sustainable economic growth. This exercise is relevant for...
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Vol. 15, No. 2, 2015

Explaining and Tackling the Shadow Economy in Estonia, Latvia and Lithuania: A Tax Morale Approach
(ProQuest: ... denotes formulae omitted.)IntroductionIn recent years, numerous studies have revealed that the shadow economy is not some minor peripheral feature but a sizeable proportion of contemporary economies. This is the case not only in developing...
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Financial Incentives to Work in the Context of a Complex Reform Package and Growing Wages: The Polish Experience 2005-2011
(ProQuest: ... denotes formulae omitted.)1. IntroductionIn the process of adjustment of tax and benefit policies governments continuously face the tradeoff between equity and efficiency with attempts to balance out the incentive effects of redistribution...
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Vol. 15, No. 1, 2015

Gender Wage Gap in Estonia: A Non-Parametric Decomposition
(ProQuest: ... denotes formulae omitted.)1. IntroductionEstonia is the country with the highest gender wage gap in the European Union (EU). According to Eurostat's(2014) internationally comparable unadjusted gender wage gap indicator, the gap amounted...
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Detection of Implicit Fluctuation Bands and Their Credibility in EU Candidate Countries
(ProQuest: ... denotes formulae omitted.)1. IntroductionThe Treaty on the European Union (EU) states that any European country may apply for membership if it respects the democratic values of the EU and is committed to promoting them.The first step is...
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No Milk for the Bear: The Impact on the Baltic States of Russia's Counter-Sanctions
(ProQuest: ... denotes formulae omitted.)1. IntroductionSince the beginning of the Russia-Ukraine crisis and the Russian annexation of Crimea, several countries have introduced economic sanctions against Russian firms and individuals. On 6 August 2014,...
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Vol. 14, No. 1/2, 2014

Against the Political Expectations and Theoretical Models: How to Implement Austerity and Not to Lose Political Power
1. IntroductionDuring the global financial crisis in 2008-10, austerity was often described as the best possible solution for achieving fiscal consolidation in the euro area and its member states. However, even when austerity was accepted on the ideological...
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Perils of Excessive Credit Growth: Evidence from 11 New EU Member States
1. IntroductionThe recent financial turmoil has reminded us of the perils of excessive lending on the economy. The financial accelerator models (Bernanke & Gertler, 1989; Bernanke, Gertler, & Gilchrist, 1999; Kiyotaki & Moore, 1997) have...
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Implications of the Liquidity Crisis in the Baltic-Nordic Region
1. Introduction and backgroundThe recent financial crisis had severe implications on the economies of many countries, but the Baltic States stand out as being among the biggest decliners as well as among the fastest to recover. The recent turbulence...
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Euro Area Monetary Policy Transmission in Estonia
(ProQuest: ... denotes formulae omitted.)1. IntroductionUnderstanding the effects of monetary policy shocks across the euro area countries plays a crucial role in policy making and in communicating the policy strategy. More so because the recent financial...
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The Contribution of R&D to Production Efficiency in OECD Countries: Econometric Analysis of Industry-Level Panel Data
(ProQuest: ... denotes formulae omitted.)1. IntroductionInnovation is increasingly acknowledged as the key to productivity growth and development, both in developed countries but increasingly also for the developing and catching up economies (Fagerberg,...
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The Equilibrium Real Exchange Rate: Pros and Cons of Different Approaches with Application to Latvia
(ProQuest: ... denotes formulae omitted.)1. IntroductionReal exchange rate is an important macroeconomic concept which reflects movements in relative prices. It is essential that the real exchange rate does not depart significantly and persistently from...
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Bidirectional Linkage between Inflation and Inflation Uncertainty - the Case of Eastern European Countries
(ProQuest: ... denotes formulae omitted.)1. IntroductionSince the initiation of the economic reforms in the early nineties, the inflation stability has been one of the most important de jure priorities for monetary authorities in every Eastern Europe...
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Measuring the Competitiveness of Latvian Companies
1. IntroductionCompetitiveness is a topic of major importance not only for public and industrial policy-makers, but also from the firm's perspective. In spite of its importance being a multidimensional phenomenon, competitiveness lacks a unified definition,...
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The Application of Bayesian Model Averaging in Assessing the Impact of the Regulatory Framework on Economic Growth
(ProQuest: ... denotes formulae omitted.)1. IntroductionThe factors of economic growth can be divided into two groups: the demand-side and the supply-side determinants. The first group encompasses the components of aggregate demand, that is, investment...
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Financial Distress and Cycle-Sensitive Corporate Investments
1. IntroductionCorporate financial distress and bankruptcy issues have been the subject of extensive research for more than 40 years, but the complexity of the factors and influences determining the success or failure of firms constantly poses new challenges...
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Editorial
The current volume of the Baltic Journal of Economics is the first one published in cooperation with Taylor & Francis/Routledge. The move from in-house production of the Journal to cooperation with a professional publisher is as natural step in the...
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Vol. 13, No. 2, Autumn

Exporting by Latvian Companies: Vitality, Drivers of Success, and Challenges
AbstractThis paper sheds light on Latvian exporters - how active they are, what challenges they face, what makes them succeed or fail. Our study draws on a survey of 503 medium-sized Latvian companies. We find that most medium-sized Latvian companies...
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Imputed Rent and Distributional Effects of Housing-Related Policies in Estonia, Italy and the United Kingdom
AbstractHousing policies are a complex set of taxes, benefits and incentives. This paper evaluates the redistributive effect of a comprehensive set of housing-related policies, taking into account the housing advantage of homeowners and social tenants....
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Financial Support for Families with Children and Its Trade-Offs: Balancing Redistribution and Parental Work Incentives
Abstract:Financial support for families with children implies inherent trade-offs some of which are less obvious than others. In the end these trade-offs determine the effectiveness of policy with respect to the material situation of families and employment...
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The Latvian Financial Stress Index as an Important Element of the Financial System Stability Monitoring Framework
AbstractThe objective of this paper is to develop a methodology for the Latvian financial stress index (FSI). To this effect, the particular methodologies widely used in international practice for composite indicators applied in financial stability monitoring...
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The Special Economic Zone in the Kaliningrad Region: Development Tool or Institutional Trap?
AbstractIn this paper we examine the special case of the "degenerated" Special Economic Zone (SEZ) in the Russian exclave on the Baltic Sea - the Kaliningrad region. The 'compensation Vs. development' policy dilemma associated with the SEZ in the exclave...
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On Baltic Slovenia and Adriatic Lithuania. A Qualitative Comparative Analysis of Patterns in Post-Communist Transformation
Norkus, Zenonas, "On Baltic Slovenia and Adriatic Lithuania. A qualitative comparative analysis of patterns in post-communist transformation ", Central European University Press, 2012. ISBN978-9955-605-68-3.From an economic sociology and political science...
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Developing an Assessment Measure for Enhancing Entrepreneurship Education through a Metacognitive Approach
Defended on November 26, 2013 at Tallinn University of Technology.The thesis is available digitally at http://digi.lib.ttu.ee/i/?950Supervisors: Urve Venesaar (Ph.D, Professor), Tallinn University of Technology, Estonia; Paula Kyrö (Ph.D, Professor),...
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A Cost Optimizing Model for IT Security
Keywords: IT security, IT Security graph-based model, Graded Security Model, Graded Security Expert System, IT security costs optimization.Defended on November 6,2013 at the Estonian Business School.The thesis is available digitally at http://www.ebs.ee/ee/teadustoo-2/publikatsioonid/ebs-doktori/Supervisor:...
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Measurement of Organizational Learning of Business Schools
Defended on May 23, 2013 at Tallinn University of Technology.The thesis is available digitally at http://digi.lib.ttu.ee/i/?905Supervisor: Urve Venesaar (Ph.D, Professor), Ollas Ehrlich (Ph.D, Professor), Tallinn University of Technology, EstoniaThis...
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Differences in Psychological Contracts in Estonia: The Role of Individual and Contextual Factors
Defended on June 13, 2013 at the Estonian Business School.The thesis is available digitally at http://www.ebs.ee/ee/teadustoo-2/publikatsioonid/ebs-doktori/Supervisors: Ruth Alas (Ph.D, Professor), Estonian Business School, Estonia and Mare Teichmann...
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Assessment of the Contribution of Safety Knowledge to Sustainable Safety Management Systems in Estonian SMEs
Defended on December 12, 2013 at Tallinn University of Technology.The thesis is available digitally at http://digi.lib.ttu.ee/i/?952Supervisors: Piia Tint (Ph.D, Professor), Tallinn University of Technology, Estonia; Charles Alexander Woolfson (Ph.D,...
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Mobile Phone Based Data in Human Travel Behaviour Studies: New Insights from a Longitudinal Perspective
Defended on December 10, 2013 at the University of Tartu.The thesis is available digitally at http://dspace.utlib.ee/dspace/handle/10062/34407Supervisors: Prof. Dr. Rein Ahas, Department of Geography, University of Tartu, Estonia Prof. Dr. Frank Witlox,...
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Vol. 13, No. 1, Spring

Public Venture Capital in Latvia
AbstractThe first generation of Latvian public venture capital programmes was launched in 2005 and so far five programmes have either been launched or are being planned. Given that the explicit focus from the side of the policy maker has been to supply...
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Small States and Big Banks - the Case of Iceland
AbstractThe Icelandic economy was hit hard by the global economic and financial crisis that started in the fall of 2008. During this crisis the three largest banks all collapsed and many other smaller banks and companies went bankrupt in the aftermath...
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The Dangers of Marginal Cost Based Electricity Pricing
AbstractLed by energy and environmental policies the EU power sector is undergoing vast changes to achieve a market driven and sustainable future. Market based price discovery and different renewable support schemes are seen as key solutions in achieving...
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Convergence between the Business Cycles of Central and Eastern European Countries and the Euro Area
AbstractAlthough entry to the Euro area (EA) is based only on fulfilment of the Maastricht criteria, implementation of optimum currency criteria and real economic convergence determines the benefits and costs of monetary integration. This paper focuses...
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Monetary Policy and Financial Stability: Empirical Evidence from Central and Eastern European Countries
AbstractThe international financial and economic crisis highlights that central banks should go beyond their traditional emphasis on low inflation to adopt an explicit goal of financial stability. Our paper addresses this highly topical issue of macro-prudential...
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Are Real GDP Levels Nonstationary across Central and Eastern European Countries?
AbstractThis study applies the Sequential Panel Selection Method (SPSM) proposed by Chortareas and Kapetanios (2009) to investigate and assess the non-stationary properties of whether real GDP follows a trend stationary or a difference stationary process...
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Factors of Economic Growth in Latvia
Doctoral Thesis defended on 22 March 2013 at the University of Latvia.Supervisor: Ismena Revina. Reviewers: Elvira Zelgalve, Irina Arhipova, Amis Sauka.Summary is available electronically: http://ideas.repec.Org/p/pra/mprapa/45500.htmlFull text is available...
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Change Management in Indian Organizations Compared to Chinese and Estonian Organizations (2009-2011)
Key words: change management, leadership style, employee involvement, foreign leader, leader's origin, resistance to change, scope of change, success of change project, transition countries, national culture, history, India, Estonia, China.Defended on...
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Critical Success Factors of Lean Thinking Implementation in Estonian Manufacturing Companies
Defended on January 22, 2013 at the Tallinn University of Technology.The thesis is available digitally http://digi.lib.ttu.ee/i/?822Supervisors: Maksim Saat (Ph.D, Professor Emeritus), Tallinn University of Technology, EstoniaEne Kolbre (Ph.D, Professor...
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Before and after the Boom: Changes in the Estonian Housing Market
Defended on April 4, 2013 at the Tallinn University of Technology.The thesis is available digitally http://digi.lib.ttu.ee/i/?838Supervisor: Ene Kolbre (Ph.D, Professor Emeritus), Tallinn University of Technology, EstoniaChanges in housing prices have...
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Inequalities on the Labour Market in Estonia during the Great Recession
Defended on April 9, 2013 at the University of Tartu.The thesis is available digitally http://dspace.utUb. ee/dspace/handle/10062/29346Supervisors: Kaia Philips (Ph.D, Associate Professor), University of Tartu, EstoniaJaan Masso (Ph.D, Senior Research...
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An Evaluation of State-Level Strategies against Botnets in the Context of Cyber Conflicts
Keywords: cyber security, cyber attack, cyber weapon, strategy evaluation, DEMATEL method, botnets, taxonomyDefended on November 19, 2012 at Estonian Business School.The thesis is available digitally http://www.ebs.ee/ee/teadustoo-2/publikatsioonid/ebs-doktori/Supervisor:...
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Vol. 12, No. 2, Autumn

The Evolution of Tax and Benefit Policy in Latvia: What Has Been the Place of Distributional Considerations?
IntroductionLatvia has one of the highest levels of income inequality and poverty in the EU. During the boom, income inequality was rising and in 2007 was the highest in the EU. During the 20082009 recession, when Latvia experienced the world's largest...
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Competitiveness of Latvia's Exporters
AbstractThis paper evaluates the competitiveness of Latvia's exporters from various aspects by using detailed trade data from UN Comtrade. Competitiveness represented by the market share of Latvia's products in world trade was on a rising trend, growing...
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What Managers Think of Capital Structure and How They Act: Evidence from Central and Eastern Europe
AbstractThis paper analyzes the capital structure and the choice of financing alternatives across a broad sample of Central and Eastern European companies. Our investigation is built on two methods: the first concentrates on capital structure decisions...
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Student Debt among University of Latvia Graduates: Repayment Prospects under Income-Contingent Student Loan Scheme
AbstractThis study examines the relationship between student debt and income by gender and field of study among University of Latvia graduates of 2009. Data analysis in the paper is also framed by suggestions for an income-contingent student loan scheme...
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FDI in the Post-EU Accession Baltic Sea Region: A Global or a Regional Concern?
AbstractThis paper investigates the dynamics of FDIs in the Baltic Sea Region (BSR) by applying the Poisson Pseudo-Maximum Likelihood estimation method on a gravity model. In particular, we analyze the influence of macro and spatial factors on investment...
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How Integrated Are the Exchange Markets of the Baltic Sea Region? an Examination of Market Pressure and Its Contagion
AbstractIn the two decades since independence, the Baltic nations' re-integration with Western Europe has resulted in close linkages to the Euro. While only Estonia has as of yet joined the common currency, Latvia and Lithuania maintain currency pegs...
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The Relationship between Governance and Performance in Water Services Provision in Estonian Municipalities
Performance improvement in public services is recognised as a goal for many governments, and has resulted in a variety of public governance reform initiatives. Nevertheless, current knowledge about how governance arrangements influence the performance...
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Vol. 12, No. 1, Spring

Financial Engineering Instruments: The Way Forward for Cohesion Policy Support? Recent Experience from the Baltic States1
1. IntroductionTraditionally, EU cohesion policy support to businesses and local authorities has almost exclusively taken the form of non-repayable grants or subsidies. However, in the current structural funds programming period (2007-2013), financial...
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Perspectives on Euro Introduction in the Romanian Economy
AbstractThis paper offers a first quantitative glance at the possible effects of preparing for Euro adoption, as well as at the ex-post effects of actual adoption. Although the complexity of the models considered gradually increases, nevertheless all...
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Competition and Efficiency in EU27 Banking Systems
AbstractIn our study, we investigate competition in the banking systems of the EU27 as a whole, but also in both old EU member states and new EU member states, in the context of European Union integration and enlargement. Specifically, we construct 2...
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Testing for Asymmetries in Price Reactions to Quarterly Earnings Announcements on Tallinn, Riga and Vilnius Stock Exchanges during 2000-2009
AbstractThis paper investigates asymmetries in price reactions to quarterly earnings announcements on Tallinn, Riga and Vilnius Stock Exchanges during 2000-2009. The results show weak evidence that the reaction to negative earnings news is lower than...
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Review of the Latvian Competitiveness Report
In February 2011, the Latvian State Chancellery ordered a report on the country's competitiveness. The Latvian Competitiveness Report (LCR), delivered in April 2012, aims to "provide an overall assessment of competitiveness" in Latvia and "to develop...
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An Econometric Evaluation of the Latvian Labour Market and How It Functions
Like other countries that joined the EU on 1 May 2004, Latvia is supposed to join the Eurozone at some point. In circumstances where the government's ability to use fiscal stimulus is restricted by EU fiscal discipline, the only shock absorption mechanism...
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