Published: 22.06.2021

Today prizes were awarded to the winners of the 19th Competition of Student Scientific Research Papers.

The first prize was awarded to Vadym Ilchuk, the Stockholm School of Economics in Riga, for the scientific research paper "Financing Constraints and Productivity Growth in Central and Eastern Europe: Firm-level Evidence". The paper provides a study of the effect of financial frictions on productivity growth rates in Central and Eastern Europe.

The author has employed the total factor productivity and productivity models and the Orbis data about annual reports of firm. Particular analysis has been dedicated to the legacies of the global financial crisis. The findings suggest a negative effect coming from financial constraints on future productivity growth rates of the firms. An increase in a firm's debt leads to a drop in productivity growth, as successful companies are able to switch to internal financing because their income is strong. According to the author, Latvia ranks among the countries having a higher productivity in the region under review.

Two second prizes were awarded to the following students:

Reinis Buneris, the Lund University School of Economics and Management, for the scientific research paper "Financial Determinants of Carbon Dioxide Emissions". The author focuses on a subject that is steadily gaining importance, i.e. pollution of the Earth and risks and consequences of irreversible climate changes.

The paper builds on several econometric methods such as the panel data regression model to investigate the factors determining emission intensity and the difference-in-difference assessment method to examine whether the European Union Emissions Trading Scheme is effective for limiting the pollution intensity. The findings of the paper provide empirical evidence of the Environmental Kuznets Curve, implying that the relationship between a country's GDP per capita and carbon dioxide emissions can be visualised by an inverse U-shaped curve. These findings suggest that it is expected that the initially relatively high pollution level in emerging markets will level out as the countries continue their development.

Ēriks Kasparenoks and Dana Supe, the Stockholm School of Economics in Riga, for the scientific research paper "A Subtle Invitation to Bargain: Online Vacancy Data-based Inquiry into the Wage Setting Policies of Latvian Employers". The authors summarise data from various online job vacancy portals by adding extra information about the firms and study wage negotiations in Latvian labour market.

The authors have found that wage bargaining is more prevalent in industries where employee productivity is heterogenous and workers are scarce. Also, larger companies negotiate less with their employees, and wage bargaining is less popular in Latgale region where the unemployment rate is higher.

Three third prizes were awarded to the following students:

Diāna Heislere and Lauris Zalva, the Stockholm School of Economics in Riga, for the scientific research paper "Mayor's Gender and Resource Allocation: Evidence from Latvia". The authors analyse how the mayor's gender affects budget allocation on different expense categories of local government budgets.

The paper builds on close elections data of Latvian local government elections between 2009 and 2019. The findings suggest that women mayors tend to spend more on health, environmental protection, public order, and safety and social protection expenses, while they spend less on general governance and economic activity expenses. At the same time, the authors have found that the gender effect on site and housing management, education, culture and entertainment expenses is inconclusive.

Aleksejs Mališevs, the Riga Technical University, for the scientific research paper "What do the Interest Rate Term Structure Models Tell Us about the Outlook: in the Context of Different European Union Countries".

The theoretical part of the paper provides an assessment of the current models which are most suitable for analysing the government bond term structure; in addition, the author has concluded that there is a two-way relationship between the interest rates and macroeconomic factors. The empirical part contains a calculation of the shadow rate and provides a forecast of the future interest rate trends. The author also estimates monetary policy effectiveness and projects future economic growth in the euro area which implies an increase in inflation and a decrease in unemployment. However, said analysis is affected by the evolution of the Covid-19 pandemic which has caused positive expectations in the last few months and has some side effects on the effectiveness of monetary accommodation.

Kristijonas Kirlys, the Vilnius University, for the scientific research paper "Uncertainty in the Euro Area and its Macroeconomic Effects". The author studies the impact of various uncertainty shocks on important macroeconomic variables of the euro area, such as GDP, investment, consumption, productivity and hours worked.

The author constructs several economic uncertainty measures and provides a systematic assessment of their impact. The findings show that, regardless of the heterogeneity in persistence, timing and overall impact of such shocks depending on the type of uncertainty and the response macroeconomic variable, the overall result of uncertainty is a strong adverse impact on activity.

Andris Vilks, Member of the Council of Latvijas Banka, during the teleconference extended a warm welcome to the participants of the event. The authors of the papers winning awards received money prizes.

In academic year 2020/2021, Latvijas Banka organised its annual 19th Competition of Student Scientific Research Papers, inviting the participation of students from Latvia, Lithuania and Estonia who at the time of the competition were registered as students of bachelor or master programmes of higher educational institutions accredited in the Baltic States as well as inhabitants of the Baltic States studying abroad.

30 papers were submitted to the competition this year – seven more than it was before. Moreover, the quality of the submitted papers and that of the award winners in particular is as high as has been observed over the most recent years. The authors are 42 students (some papers have two authors) from 11 higher educational institutions of Latvia and foreign countries (the Stockholm School of Economics in Riga, the Riga Graduate School of Law, the BA School of Business and Finance, the University of Latvia, the Riga Technical University, the "RISEBA" University of Business, Arts and Technology, the Ventspils University, the Tallinn University of Technology, the University of Tartu, the Vilnius University and the Lund University).

More detailed information on the competition 

Today the competition materials will be published on the website of Latvijas Banka macroeconomics.lv.