Republic of Lithuania: Selected Issues

International Monetary Fund

No 2008/140, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper estimated the output gap in Lithuania using three different methodologies—an HP filter, a panel regression, and a production function. This study examines how the levels of the current account deficit and the real exchange rate in Lithuania compare with estimates of their equilibrium values. The regression-based estimates are sensitive to the regression specifications and samples that determine equilibrium values. The large current account deficit in Lithuania may well be the equilibrium outcome of rapid income catch-up driven by strong fundamentals, including EU accession.

Keywords: ISCR; CR; current account; Lithuania; deficit; production function approach; current account balance; current account deficit; HP filter; deficit proxy; Current account balance; Current account deficits; Real exchange rates; Output gap; Total factor productivity; Global; Eastern Europe (search for similar items in EconPapers)
Pages: 39
Date: 2008-04-22
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