CC BY
1
develop the skills (local development through training seminars, short-term training courses, refresher courses, recruitment of training staff).
The implementation of the above-mentioned basic requirements may result in stable profits from the operation of the additional branch by farming enterprises. These requirements are the most important and irreplaceable in establishing the production and, therefore, considered to be the necessary economic basis for multi-branch farming enterprises. However, additional requirements may be put for some branches. For example, the water supply issue should be solved beforehand for the cattle breeding farms that plan to establish production in the horticulture. Similarly, the features of other any planned production branch should be considered.
The above-mentioned measures shall ensure the payback of investments in the additional branch, and give opportunity for farm managers and specialists not to be distracted from the main branch by the additional branch or from the additional branch by the main branch throughout the year (during the critical agricultural seasons), preventing lack of attention to the additional branch, and organize proportional operation of the main and additional branch.
УДК 338.27
Kiseleva Evgenia
First year student of master degree, International Financial Faculty Financial University Under the Government of Russian Federation
Russia, Moscow
THE IMPACT OF ECONOMIC GROWTH ON THE FINANCIAL SECTOR OF THE ECONOMY OF LATVIA
Abstract: This paper examines whether the economic growth impact on the development of the financial market in Latvia.
Keywords: economic growth, financial sector, Latvia, econometrical model
Theoretical background
The connection between the operation of the financial system and economic growth has been one of the most heavily researched topics in development economics. A lot of scholarly papers have been written with the aim to verify how the development and structure of an economy's financial sector affect domestic savings, capital accumulation, technological innovation, and income growth, or vice versa.
There is an evidence of a statistical relation between finance and growth, which indicates causal link running from finance to growth. However, the relationship where high economic growth creates demand for more financial services and thus stimulates the development of the financial sector is equally possible. For instance, Demirguc-Kunt and Levine [2] demonstrate that banks, other financial intermediaries and stock markets are larger, more active and more efficient in high income countries. As far as the link between finance and growth
is concerned, for a long time, it was common to say that finance affects growth. Moreover, Levine [3] argues that the growth-maximizing mixture of financial markets and intermediaries may depend on economic development and also on legal, regulatory, political, and/or other factors.
Data and model
According to the literature, the generalised equation describing the impact of economic growth on the size of the financial sector may be as follows:
(1) Y = a0 + a1 GDP + a2CPI + a3Inf + a4Int + a5HTe + a6Inv + e Table 1. Description of the equation
Letter Variable Explanation
Y Domestic credit provided by financial sector (% of GDP) Domestic credit provided by financial sector has been chosen as an indicator of financial market development as it is the most reliable one. Stock market is too merged with the overall European market, so it is impossible to calculate stock market indicators for Latvia.
GDP GDP per capita growth (annual %) GDP is the main indicator of economic growth and the main variable in this research. It is vital to test whether overall economic growth has the impact on financial sector. It is supposed, that GDP per capita growth, as the main indicator of economic growth, will significantly describe the exogenous variable.
CPI Consumer price index (2010 = 100) The more the consumer price index, the more expensive basic market basket and less amount of money can be delivered to the financial market
Inf Inflation, GDP deflator (annual %) Inflation influences people's trust to financial market
Int Real interest rate (%) Interest rate is the first indicator for determining cost of capital, so too high interest rate may lead to the decrease in demand for bank credit
HTe High-technology exports (% of manufactured exports) Technological progress and innovation are widespread in the "production process" of the financial sector. Thus, technological progress can be expected to change the organisation of financial activity
Inv Net investment in nonfinancial assets (% of GDP) Investment in non-financial assets represents the growth of real sector of economy which boost the demand for financial market services
e Disturbance term
According to the coefficient of determination, the regression model is described by correct variables, as R2 is more than 70%. Moreover, F-test shows, that F is more than Fcrit (Fcrit is approximately 2,85). It means that R2 is significant in the model. Thus, the model is described by its variables by 70%.
As for testing the significance of coefficients, standard errors of the coefficients of the regression model should be less than their value. This rule is not fulfilled for the following variables: GDP, Inf , Inv.
This result ruins the main hypothesis that financial market development depends mainly on the growth of the GDP. Furthermore, inflation and net investment in nonfinancial assets are also insignificant in the model.
So we found out that the more correct equation will be as follows:
(2) JY = a0 + a2CPI + a4Int + a5HTe + e
( ) { R2 = 0,88 F = 43,3
Variables describe 88% of the model and each variable is significant.
The fitted model is as follows:
(3) Yfitted = - 7,02 + 1,23 CPI - 2,46 Int - 4,43 HTe
Ypredicted (1996) = 2,192. Confidence intervals of predictive values are as
follows: -16,64 < Y1996 < 21,02. So, Yreal(1996) appears to be inside the interval. Thus, the model can be called adequate.
In order to check the model for homoscedasticity the Goldfeld-Quandt test was used. GQ = 0,45, GQ(-1) = 2,18 what is less than Fcrit = 3,16. It means that there no heteroscedasticity in the model. With the aim to check autocorrelation Durbin-Watson test was used. Calculated d for the model is in the interval with uncertainty level, so other variables may exist that describe the model.
Conclusion
As far as correlation between financial market development and economic growth is concerned, the analyses showed that the first can be described by the second but with several limitations. The financial market development was represented as a domestic credit provided by financial sector. The choice was predetermined by the specific characteristic of Latvian financial market (inclusiveness into European financial market). Such indicator can be described by such economic variables as consumer price index, high-technology and export real interest rate while GDP per capita growth, inflation, and investments in non-financial assets have not significant role. Such dependence may be explained as follows: financial market participants actively use these two variables when deciding whether to invest in financial instruments. So, the rise of consumer price index by 1% leads to the change in domestic credit provided by financial sector by 1,23% of GDP. As for real interest rate - when it rises by 1%, domestic credit provided by financial sector declines by 2,46% of GDP. The model is adequate and appropriate for predicting the domestic credit provided by financial sector, however, there can be other variables that have also significant impact. However, such factors may be immeasurable, for example legal, regulatory, political, and other factors.
Literature:
1. Econometrics. Model of real system /Tregub I.V.// Москва, 2016.
2. Demirgu?-Kunt, A., Levine, R, Bank-based and market-based financial systems, cross-country comparisons/ World Bank Policy Research Working Paper, 1999. No. 2143, Washington DC// Available:
http://documents.worldbank.org/curated/en/259341468739463577/Bank-based-and-market-based-financial-systems-cross-country-comparisons
3. Levine, R. Finance and Growth: Theory and Evidence/ NBER Working Paper, 2004, No. 10766, National Bureau of Economic Research, Cambridge, MA.// Available: www.nber.org/papers/ w10766
4. OECD Economic Surveys LATVIA OVERVIEW/
5. World Bank national accounts data/ the official site of the World Bank// Available: http://databank.worldbank.org/data/reports
УДК 519.868
Korotkiy R.M. master student of 1st year IFF group 1-2m Scientific adviser: Tregub I. V.
Ph.D. in Technics, Sc.D. in Economics, Professor Financial University under the Government of the RF
Moscow, Russia
Короткий Р.М. студент 1 курса магистратуры МФФ группа 1-2м Трегуб И.В., к.тн., д.э.н. научный руководитель, профессор Финансовый университет при Правительстве РФ
Россия, г. Москва
ANALYSIS OF THE PRESENCE OF "DUTCH DISEASE" IN SWEDEN АНАЛИЗ НАЛИЧИЯ "ГОЛЛАНДСКОЙ БОЛЕЗНИ" В ШВЕЦИИ
Annotation: Economy of the country should have a very solid basis to prosper. Some states use natural resources as foundation for further economic development. "Dutch disease " phenomenon shows that large investments in this sphere will cause deindustrialization of economy. This article is devoted to detection of "Dutch disease" in Sweden based on local natural resources.
Key words: "Dutch disease", Sweden, econometrics, natural resources Аннотация: Экономика страны должна иметь очень надежную основу для развития. Некоторые государства используют природные ресурсы в качестве "фундамента" для дальнейшего экономического роста. Явление "Голландская болезнь" показывает, что крупные инвестиции в этой сфере приведут к деиндустриализации экономики. Данная статья посвящена выявлению «голландской болезни» в Швеции по отношению к местным природным ресурсам.
Ключевые слова: "Голландская болезнь", Швеция, эконометрика, полезные ископаемые
