The Influence of Business Cycles to Lithuanian Manufacturing Sectors’ Performance

Business cycle is one of the main concept describing an economy and its dynamics. As a young free-market economy Lithuania is also under effect of this phenomenon. Therefore, some consequent uncertainty occurs which market players have to deal with. The main objective of this paperwork is to estimate the influence of the business cycles to Lithuanian manufacturing industry, as one of the main branches of the country’s economy. This paper has three main parts. In the first part it is discussed the concept of business cycles, development of business cycle theory and described the relevant methods in business cycles research. In the empirical part the regression analysis was conducted to check the dependency of manufacturing industries and its branches on business cycles in Lithuania. Relevant times-series data was processed by using Census X11 seasonality filter and Hodrick-Prescott filter to extract cyclical component from the proxies of business cycles (Lithuanian real GDP). The regression do not proof statistically significant influence of business cycles to aggregate value of manufacturing industry’s output, but by conducting regression analysis on branches of the industry some evident dependencies were found. In the last part of the paperwork it is discussed the feasible hedging tools from the influence of business cycles to countries manufacturing sector’s performance. Here it is shown that international business cycles converge, therefore major role in dealing with... [to full text]