Title: An analysis of investments and their drivers in Lithuania
Authors: Mariarosaria Comunale - Bank of Lithuania (Lithuania) [presenting]
Abstract: Recent developments in investments in Lithuania using a broad set of possible drivers, including EU funds, are analysed. We apply a Bayesian VAR setup with data from 1995Q1 to 2019Q4. We also look at business vs government investments and different types of investments, especially innovative investments, drawing comparisons. We find that the data on business investments basically drive total investments. The main outcomes are mostly in line with the literature, but we do see some crucial differences across types. Among the key results: 1) we see a minor role for lending rates; 2) we confirm the vital role of demand-side variables (foreign demand or private consumption); 3) there is pro-cyclicality of government investments and a positive correlation with business investments; 4) the uncertainty is key for some sectors and positively drives more innovative/intangible investments and 5) EU funds do feed investments, but we see a crowding out in the short-run for business-related investments, while there are some positive contributions to public investments.