Baltic Region Outlook (BRO) – a weekly economic bulletin in English language. In this week’s Baltic Region Outlook (BRO) edition – Latvia.
Main news topics:
- Euro area GDP +1.7% in 2016, +1.8 in Q4 y-o-y
- Russian GDP -0.2 in 2016, Polish GDP +2.8 in 2016
- 21.8% of Latvia’s population at risk of poverty in 2015
BRO: Economic Insights
The Phillips curve links price or wage growth to a measure of economic slack, such as the output gap and provides a framework for analyzing
and forecasting inflation developments.
Phillips curves for Euro area (19), Estonia, Latvia and Lithuania are estimated using the simple linear regression.
The simple framework model explains about 18-20 percent of variation in inflation. The coefficients associated with the gaps, or the “slopes” of the Phillips curve, are significant and their signs are as expected – wider negative gaps are typically accompanied by lower inflation rates. According to the $R^2$ coefficient, the output and unemployment gap can explain around 18-20\% variation in inflation in this simple framework. The intercepts depict the expected average core inflation rate given a 0-gap from potential GDP. In this scenario, annual core inflation rate in Estonia is estimated at 2.6\%, in Latvia 3.3\% and in Lithuania 2.3\%
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Category: Baltic Region Outlook
Tags: Baltic Region Outlook
, Phillips curve
Starting with the year 2017 Lithuanian-Economy.net begins to publish Baltic Region Outlook (BRO) – a weekly economic bulletin in English language. BRO is to come out on every Monday and will consist of three parts:
- Key economic indicators for either Lithuania, Latvia or Estonia
- Economic news from Baltic states, euro area and the world
- Economic insight – a section with a brief economic analysis of a contemporary economic topic
The list of economic indicators in not yet final and may adjust during next couple of months. Probably more finance data will be included in the future bulletins. Economic news are collected from various sources covering economic news in the Baltics. In economic insight part, most contemporary topics are to be covered, starting with increasing inflation in euro area in Decmeber 2016, which together with other robust news on economic recovery in eurozone will fuel discussions on when ECB will start tapering its QE.
The general idea for such a bulletin comes from the time of my internship at DnB Nord bank in Vilnius in 2011. But compared to the bulletin of DnB Nord, BRO has more focus on the “Economic insight” part and does not cover Poland every four weeks.
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