Prizes were awarded to the winners of the Competition of Student Scientific Research Papers organised by Latvijas Banka

Yesterday at the award ceremony held at Latvijas Banka, prizes were awarded to the winners of the 23rd Competition of Student Scientific Research Papers. Students from the University of Latvia and Riga Technical University attained notable success in this year's competition.

The first prize was awarded to Aigars Langins (University of Latvia) 

European Central Bank Interest Rate Transmission in the Euro Area 

The content of the paper:

The study is dedicated to analysing the transmission of the European Central Bank's interest rate policy to key macroeconomic variables by developing an agent-based model (ABM) that directly incorporates the heterogeneity of firms and individuals in the euro area. This model allows for the examination of factors affecting the transmission. Traditionally, ABMs are difficult to interpret due to emergent non-linear effects and interactions. To address this, Shapley values are used in combination with surrogate-model techniques to improve the interpretability of the results. The analysis based on this model allows to identify the main drivers of transmission and estimates the relative short- and long-term effects of interest rate changes across heterogeneous economies. The findings highlight several factors that affect monetary transmission differently in cases of monetary tightening and easing. 

The second prize was awarded to Kirils Timofejevs (Riga Technical University) 

Forecasting Latvia's GDP Using Statistical and Machine Learning Approaches 

The content of the paper: 

The aim of the paper is to explore and apply econometric methods and machine learning algorithms to forecasting Latvia's GDP growth rates, as well as to compare the results obtained. The study aims to evaluate the effectiveness of these distinct modelling paradigms and to assess their relative predictive performance under different economic conditions. The author constructs a robust framework for GDP nowcasting with a strong emphasis on careful data acquisition and preparation, particularly the creation of pseudo-real-time datasets. Empirical results demonstrate that machine learning algorithms provided competitive – and in some cases superior – forecast accuracy prior to the COVID-19 pandemic. However, in the volatile post-2020 period marked by structural shifts, traditional statistical models proved more robust. This suggests that while machine learning can capture nonlinear patterns effectively, its performance may deteriorate in the face of regime changes unless models are frequently retrained or augmented with additional knowledge. 

The third prize was awarded to Sandis Kurtišs (University of Latvia)

Population Ageing and Its Impact on Pension Sustainability in Latvia Using OLG Model 

The content of the paper: 

The study builds an overlapping-generations (OLG) model to assess the sustainability of the first-pillar pension scheme. Using this model, the author analyses several scenarios that could ensure the sustainability of Latvia's pension system. The analysis focuses on the impact of three following factors: productivity growth, improvement of the migration balance, and increases in the retirement age. According to the findings, each factor alone can generate a fiscal surplus, but their combined implementation provides the greatest resilience against demographic and economic shocks. The study highlights the importance of Latvia's migration balance, Among the main policy recommendations is the need to reduce emigration and/or attract more highly qualified immigrants. If these goals cannot be achieved, a gradual increase in the retirement age – up to 69 years – will be necessary.

The third prize was awarded to Miks Dzedons, Pēteris Leveika (SSE Riga)

Foreign Owners in EU Countries: Boosting ESG Performance or Just Passing Through?

The content of the paper: 

The study investigates the role of foreign ownership in enhancing the ESG performance among EU companies. The authors identify several potential drivers of this process: improved information transparency; a greater emphasis on long-term thinking; increased analyst and investor attention; and better access to capital. To test their hypotheses, the authors use a compilation of data from multiple sources. Their findings suggest that foreign ownership can be associated with a positive effect on the ESG performance. Although they have not empirically identified particular drivers of this phenomena – partly due to data limitations faced by many researchers – they keep an open mind to possible improvements and outcomes that could emerge with more appropriate data. They do, however, find that the origin of the dominant foreign owner is important. If the owner comes from a country with higher GDP and stronger governance scores, the company's ESG performance is higher.

Honourable mention 

Elīna Elizabete Pabērza (Riga Technical University)

A Data-Driven Assessment of the Shadow Economy

Honourable mention 

Markuss Strižko, Tomass Vilks (SSE Riga)

The Impact of P2P Financing on Non-bank Lender Growth and Profitability 

Honourable mention 

Anna Masjko, Gioia Pucci (SSE Riga)

How Minimum Wage Increases Affect Catering Service Firms: the Case of Estonia and Latvia 

Honourable mention 

Madara Inita Drukaļska, Merili Anderson (SSE Riga)

Intra-industry Trade in Services and Eurozone Convergence 

Mārtiņš Kazāks, Governor of Latvijas Banka, extended a warm welcome to the participants of the event. The authors of the papers winning awards received money prizes. 

In the academic year 2024/2025, Latvijas Banka organised its annual 23rd 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. 

29 papers were submitted to the competition this year from 6 higher educational institutions of Latvia and foreign countries (Stockholm School of Economics in Riga, University of Latvia, Latvia University of Life Sciences and Technologies, Riga Technical University, BA School of Business and Finance, and Frankfurt School of Finance & Management). More detailed information on the competition is available at: https://www.macroeconomics.lv/konkursi/latvijas-bankas-competition-student-scientific-research-papers. 

The competition materials will be published on the websites of Latvijas Banka at bank.lv and macroeconomics.lv.