Decoupling from the East Toward the West? Analyses of Spillovers to the Baltic Countries

June 1, 2009

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Decoupling from the East Toward the West? Analyses of Spillovers to the Baltic Countries, (USA: International Monetary Fund, 2009) accessed June 21, 2025

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper uses VAR models to examine the magnitude and sources of growth spillovers to the Baltics from key trading partners, as well asfrom the real effective exchange rate (REER). Our results show there are significant cross-country spillovers to the Baltics with those from the EU outweighing spillovers from Russia. Shocks to the REER generally depress growth in the Baltics, and this intensifies over time. We also find that financial and trade channels dominate the transmission of spillovers to the region which partly explains the realization of downside risks to the Baltics from the global slowdown.

Subject: Exports, Oil prices, Real effective exchange rates, Spillovers, Vector autoregression

Keywords: GDP, Latvia, Lithuania, Price, WP

Publication Details

Pages:

38
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/125
Stock No:

WPIEA2009125
ISBN:

9781451872729
ISSN:

1018-5941

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