Has the transition to the EU changed the transmission of

monetary policy shocks in EU accession countries?

Anton Izvolenskiy
Andres Fernando Garcia Parrado
Dimitrios Bermperoglou
 1. A short theoretical background of short run effects of money
money and
interest rate on economy

Instruments : variables directly controlled by the central bank (e.g. an interest rate
charged on reserves borrowed by the central bank)

Intermediate target variables:

variables lie in the sequence of links that run from policy
instruments to real economic activity. For example, faster than expected money growth
may signal that real output is expanding more rapidly than was previously thought. The
central bank might change its operating target (in this case, raise the interbank interest
rate) to keep the money growth rate on a path believed to be consistent with achieving
its policy goals. In this case, money growth is serving as an intermediate target variable.

We are going to use both money supply and money market interest rate as the policy
variables.

How the central bank can increase money supply?

Open-market operations by the CB are the principal tool of monetary policy: the CB can
increase or reduce the monetary base by buying government debt from banks or selling
government debt to banks.

1
 Monetary policy and its short-
short-run effects

Expansionary Monetary Policy

If the ECB pursues expansionary monetary policy by increasing the supply of money
then the nominal interest rate will fall, investment will rise, consumption will rise. Finally,
output may also rise (see IS-LM model).

o interest sensitive purchases are less expensive

o people save less and consume more
o because the supply of money rises, people buy more goods and services.
As the business cycle expansion gets underway, wealth rises and people
buy more financial assets as well.

In long-run, prices increase and restore equilibrium. Money does not affect real
economy.

2
Contractionary Monetary Policy

As the money supply is contracted, interest rates rise, investment will fall, consumption
will fall.

In turn…rising
turn…rising interest
interest rates

People make a portfolio choice : money and bonds.

People will choose to hold more bonds than they did before because the return on a
bond has risen (i has gone up).

So, if the ECB pursues contractionary monetary policy by decreasing the supp
supply
ly of
money, the nominal interest rate will rise, investment will fall, and consumption will fall
and so output.
output

3
 2. Research

Sims (1992)

VAR evidence on money and output

Results: Monetary shocks lead to a hump-shaped output response. Increase in
money growth leads to increase in output over its steady-state.

Eichenbaum (1992)

Positive money supply shock interest rate rises (puzzling)

Output falls (output puzzle)

Positive funds-rate shock output falls (no puzzle!)

Prices rise (price puzzle!)

4
 3. Econometric project

Data sources
 International Monetary Fund
 3 countries: Estonia, Latvia, Lithuania
 Quarterly data from 1998 – 2009
 Two samples a) before EU accession 1998:1 – 2004:2
b) after EU 2004:3 – 2009:4
 Variables: Money supply M1 (Currency in circulation + overnight deposits)
Annual rate of change of HCPI
Money market interest rate
Per capita GDP in current prices 2005

Note: The Eastern-european countries do not have sufficient data available since
their economic record (history) is too short till now. For this reason, the results we
obtain are not very robust. However, we do make some comments on them, just to
emphasize how empirical work (impulse responses here) can be linked and directly
compared with theoretical facts.

5
Evidence for the causality between money growth and output

Money supply seems to lead output.

output

.20

.15

.10

.05

.00

-.05

-.10

-.15

-.20
98 99 00 01 02 03 04 05 06 07 08 09

LM GDP

Strong correlation evidence between money supply and output:

Estimated correlation coefficient ≈ 0.99

6
 Methodology

The VAR system can be written in this vector form:

Yt = µ + δt + Π1 ⋅ Yt −1 + Π 2 ⋅ Yt − 2 + Π 3 ⋅ Yt − 3 + Π 4 ⋅ Yt − 4 + ut
Where
mt 
Yi - vector of variables π t 
 yt 

Πi - matrix of coefficients, 3x3

µ - constant vector, 3x1
δ - trend vector, 3x1
ut - vector of VAR shocks.

• First we have to decide the optimal lag length of the VAR model. Doing it through E-views, we
obtain the following table. As we see, the most information criteria suggest using 4 lags.

VAR Lag Order Selection Criteria

Endogenous variables: LM_ES INFLATION_ES
LGDP_ES
Exogenous variables: C @TREND
Sample: 1998Q1 2004Q2
Included observations: 22

Lag LogL LR FPE AIC SC HQ

0 150.2510 NA 4.06e-10 -13.11373 -12.81617 -13.04363

1 166.9778 25.85051 2.06e-10 -13.81616 -13.07227 -13.64093
2 172.3288 6.810377 3.10e-10 -13.48444 -12.29421 -13.20406
3 185.5962 13.26738 2.55e-10 -13.87238 -12.23582 -13.48686
4 230.0949 32.36271* 1.51e-11* -17.09954* -15.01664* -16.60887*

* indicates lag order selected by the criterion

LR: sequential modified LR test statistic (each test at 5% level)
FPE: Final prediction error
AIC: Akaike information criterion
SC: Schwarz information criterion
HQ: Hannan-Quinn information criterion

7
• Next, we estimate the VAR(4) model and the coefficients estimates are summarized in a more
convenient VAR representation as follows:

mt  − 0.39  0.05   0.36 0.13 0.06  mt −1   0.14 0.05 0.009  mt −2 
π  =  0.32  + 5 E − 05 ⋅ t + − 0.11 0.51 0.07  ⋅ π  +  0.13 − 0.25 − 0.03 ⋅ π  +
 t        t −1     t −2 
 yt   0.06   0.13   0.39 1.56 − 0.24  y t −1  − 0.37 − 0.63 0.48   y t −2 
− 0.22 1.93 0.05  mt −3   0.11 − 2.03 0.56  mt −4  u mt 
 
+  − 0.03 0.89 − 0.01 ⋅ π t −3  + 0.02 − 0.83 − 0.08 ⋅ π t −4  +  u πt 

− 0.22 − 0.17 0.14   y t −3  0.38 − 0.06 0.42   y t − 4   u yt 

Where u are the VAR disturbances/ shocks with var-cov matrix:

 σ m2 σ mπ σ my 
 
Vu = σ mπ σ π2 σ πy 
σ my σ πy σ y2 


• Remember that VAR presented above can be reduced to a vector notation form as:

Yt = µ + δt + Π1 ⋅ Yt −1 + Π 2 ⋅ Yt − 2 + Π 3 ⋅ Yt − 3 + Π 4 ⋅ Yt − 4 + ut
We define a lag operator L such that: Lxt = xt −1
Hence, the above matrix equation becomes:

Yt = µ + δt + Π1 ⋅ Yt −1 + Π 2 ⋅ L Yt −1 + Π 3 ⋅ L2Yt −1 + Π 4 ⋅ L3Yt −1 + ut
(
⇔ Yt = µ + δt + Π1 + Π 2 L + Π 3 L2 + Π 4 L3 ⋅ Yt −1 + ut )
⇔ Yt = µ + δt + Π ( L) ⋅ Yt −1 + ut

• However, in order to compute impulse responses, we need to estimate the coefficients of the
SMA(∞) representation. Structural moving average (SMA) representation is derived through the
SVAR(p) representation. And SVAR(p), in turn, can be derived from the VAR(p).
A SVAR representation can be derived from the reduced VAR by multiplying the VAR model
with a Q matrix.

8
 Q ⋅ Yt = Q ⋅ µ + Q ⋅ δt + Q ⋅ Π ( L) ⋅ Yt −1 + Q ⋅ ut
= κ + т + Q ⋅ Π ( L) ⋅ Yt −1 + et

Where e are the structural shocks with var-cov matrix:

σ~m2 0 0
 ~ 
Ve =  0 σ2
π 0
0 0 σ~ y2 


As we see, the structural VAR captures not only a lagged but also contemporaneous
relationships among all the variables of the model. The contemporaneous effects are
summarized in the matrix Q. Also the VAR shocks are related to the structural shocks with the
formula:

Qu = e
Obviously, Q is a 3x3 matrix since there are 3 variables in the model.
Now, we have to make some identification assumptions on matrix Q, in order to exactly
identify the SVAR parameters using the estimated VAR parameters. For this reason, we proceed
to the following manipulations:

Qu = e ⇔ u = Q −1e = Θ ⋅ e

Identification Assumption:
Assumption Monetary policy is exogenous to contemporaneous output
and inflation shocks.

Θ is lower triangular

u m  θ11 0 0  ε m   u m = θ11ε m
      
uπ  = θ 21 θ 22 0  ⋅ ε π  ⇒  u π = θ 21ε m + θ 22 ε π
 u y  θ 31 θ 32 θ 33  ε y  u = θ ε + θ ε + θ ε
     y 31 m 32 π 33 y

9
According to our assumption of the exogeneity of the policy shock, we need to make Θ (thus Q)
lower triangular. In practice, that means setting 3 elements of the matrix equal to zero.

However, E-views uses a slightly different notation of presenting the relation between the VAR
and the SVAR shocks. It assumes that:

A⋅u = B ⋅e
So nothing changes in essence. What was previously as matrix Q now can be decomposed as:

Q = B −1 A

So in order to identify matrices A and B, we need to impose 3 restrictions on matrix Q. In the

following table, in the first part, exactly we impose these restrictions by making A a lower
triangular matrix with 1 as diagonal elements and making B a diagonal matrix. E-views will
estimate the remaining elements of these matrices. The estimates are given in the second part of
the table.
Structural VAR Estimates
Sample (adjusted): 1999Q1 2004Q2
Included observations: 22 after adjustments
Estimation method: method of scoring (analytic derivatives)
Convergence achieved after 9 iterations
Structural VAR is just-identified

Model: Au = Be where E[ee’]=I

Restriction Type: short-run pattern matrix
A=
1 0 0
C(1) 1 0
C(2) C(3) 1
B=
C(4) 0 0
0 C(5) 0
0 0 C(6)

Estimated A matrix:
1.000000 0.000000 0.000000
0.197561 1.000000 0.000000
-1.404929 -1.994283 1.000000
Estimated B matrix:
0.017921 0.000000 0.000000
0.000000 0.009269 0.000000
0.000000 0.000000 0.014260

10
Note that with the help of matrices A and B (thus Q) the VAR can be written as

Y t = µ + δ t + Π ( L ) ⋅ Y t −1 + u t =
= µ + δ t + Π ( L ) ⋅ Y t −1 + Q − 1 e t
Now everything is done! We have already estimated the coefficients of the VAR model, i.e.
elements of Π matrices, and previously we estimated matrices A and B (which yields Q). The
final step is to plug equations of this system one into the other, then iterating backward in time
and finally obtaining the SMA(∞) representation:

Yt = γ + Φ 0 et + Φ1et −1 + Φ 2 et − 2 + ........

Where Φ are 3x3 matrices, whose elements captures the impulse responses. More precisely, the
analytical expression of the system above is:

mt  γ m  φ11 φ12 φ13  emt  φ11 φ12 φ131  emt −1 

0 0 0 1 1

π  = γ  + φ 0 φ 0 φ 0   e  + φ 1 φ 1 1 
φ 23

 t   π   21 22 23   πt   21 22   eπt −1  + ........
 yt  γ y  φ31 φ32 φ33   e yt  φ31 φ32
0 0 0 1 1
φ331   e yt −1 

After specifying matrices A and B, E-views can compute automatically the impulse responses
and yields the following graphs. We concentrate on impulse responses of all variables to a
money shock only.

The impulse response function plots the percentage deviation of a variable from its steady state
against periods of time after the shock. So, for example, a money shock causes money in the first
period after the shock (t=1) to increase almost to 0.017% over its steady state, as we see in the
next graph.

11
ESTONIA
Effects of a monetary policy shock on Money

* Shock 1 represents a money supply shock, while shock 2 represents an interest rate shock.

Response of LM_ES to Structural

Response of LM_ES to Structural One S.D. Shock1
One S.D. Shock1 .5
.08
.4
.06 .3

.04 .2
.1
.02
.0
.00
-.1
-.02
-.2
-.04 -.3

-.06 -.4
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of LM_ES to Structural Response of LM_ES to Structural

One S.D. Shock1 One S.D. Shock1
.08 .15

.10
.04
.05

.00 .00

-.05
-.04
-.10

-.08 -.15
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of LM_ES to Structural Response of LM_ES to Structural

One S.D. Shock2 One S.D. Shock2
.03 .03

.02
.02
.01

.01
.00

.00 -.01

-.02
-.01
-.03

-.02 -.04
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

12
 Effects of a monetary policy shock on Inflation
Response of INFLATION_ES to Structural Response of INFLATION_ES to Structural
One S.D. Shock1 One S.D. Shock1
.06 .2

.04 .1

.02 .0

.00 -.1

-.02 -.2

-.04 -.3

-.06 -.4
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of INFLATION_ES to Structural Response of INFLATION_ES to Structural

One S.D. Shock1 One S.D. Shock1
.06 .06

.04
.04
.02
.02
.00
.00
-.02
-.02
-.04

-.04 -.06

-.06 -.08
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of INFLATION_ES to Structural Response of INFLATION_ES to Structural

One S.D. Shock2 One S.D. Shock2
.012 .02

.008
.01

.004
.00
.000

-.01
-.004

-.008 -.02

-.012 -.03
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

13
 Effects of a monetary policy shock on GDP

Response of LGDP_ES to Structural Response of LGDP_ES to Structural

One S.D. Shock1 One S.D. Shock1
.12 .4
.3
.08
.2

.04 .1
.0
.00
-.1

-.04 -.2
-.3
-.08
-.4

-.12 -.5
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of LGDP_ES to Structural Response of LGDP_ES to Structural

One S.D. Shock1 One S.D. Shock1
.12 .15

.08 .10

.04 .05

.00 .00

-.04 -.05

-.08 -.10

-.12 -.15
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of LGDP_ES to Structural Response of LGDP_ES to Structural

One S.D. Shock2 One S.D. Shock2
.04 .03

.03 .02

.02 .01

.01 .00

.00 -.01

-.01 -.02

-.02 -.03

-.03 -.04

-.04 -.05
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

14
 Effects of a monetary policy shock on Interest Rate
Response of IR_ES to Structural Response of IR_ES to Structural
One S.D. Shock1 One S.D. Shock1
.03 .012

.02 .008

.01
.004

.00
.000
-.01
-.004
-.02
-.008
-.03

-.04 -.012
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of IR_ES to Structural Response of IR_ES to Structural

One S.D. Shock2 One S.D. Shock2
.012 .004

.003
.008 .002

.001
.004
.000

-.001
.000
-.002

-.004 -.003
-.004

-.008 -.005
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

15
Comments of the impulse responses for ESTONIA

The impulse response of money and inflation due to a money supply shock is statistically
significant, but is almost zero.

The impulse response of output due to a money supply shock is not statistically
significant, almost zero.

The impulse responses of money, inflation and output, using the interest rate for policy
shocks, are not statistically significant, almost zero.

However, what we could say if the results were significant (in fact we have to include more
observations in our sample to make results robust) :

Before EU accession, an expansionary policy (using money supply shocks) made

inflation to fall. Also a contractionary policy (using interest rate) made inflation to rise.
These results deviate from the standard theory (price puzzle). After the EU accession,
however, the results are expected according to the theory if we consider a money supply
shock. However, the price puzzle remains and it is statistically significant (very small
though) in the case of interest rate policy shock. Hence, the “liquidity effect” does not
hold in the case of interest rate policy.

Before EU accession, an expansionary policy (using money supply shocks) made output
to fall. Also a contractionary policy (using interest rate) made output to rise. These results
deviate again with the standard theory (output puzzle). After the EU accession, however,
the results are the expected ones if we consider a money supply shock. However, the
output puzzle remains in the case of interest rate policy shock. Hence, the “liquidity
effect” does not hold in the case of interest rate policy.

The results for the other countries, Latvia and Lithuania, are similar. Furthermore, the
impulse responses in all cases are either not statistically significant or almost zero. Hence, the
effects of monetary policy shocks are very weak. (Again the problem is the lack of sufficient
number of observations that would enable us to derive more robust results).

16
Latvia
Effects of a monetary policy shock on Money

Response of LM_LAT to Structural Response of LM_LAT to Structural

One S.D. Shock1 One S.D. Shock1
.3 .3

.2 .2

.1
.1
.0
.0
-.1
-.1
-.2

-.2 -.3

-.3 -.4
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of LM_LAT to Structural Response of LM_LAT to Structural

One S.D. Shock2 One S.D. Shock1
.05 .06

.04
.04
.03
.02 .02

.01
.00
.00

-.01 -.02

-.02
-.04
-.03
-.04 -.06
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of LM_LAT to Structural

Response of LM_LAT to Structural
One S.D. Shock1 One S.D. Shock2
0.4 .16

0.2 .12

0.0 .08

.04
-0.2
.00
-0.4
-.04
-0.6
-.08
-0.8 -.12

-1.0 -.16
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

17
 Effects of a monetary policy shock on Inflation

Response of INFLATION_LAT to Structural Response of INFLATION_LAT to Structural

One S.D. Shock1 One S.D. Shock1
.03 .06
.05
.02
.04
.01 .03
.02
.00
.01

-.01 .00
-.01
-.02
-.02
-.03 -.03
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of INFLATION_LAT to Structural Response of INFLATION_LAT to Structural

One S.D. Shock1 One S.D. Shock1
.015 .10

.08
.010
.06
.005
.04
.000 .02

-.005 .00

-.02
-.010
-.04
-.015 -.06
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of INFLATION_LAT to Structural Response of INFLATION_LAT to Structural

One S.D. Shock2 One S.D. Shock2
.010 .04

.03
.005
.02

.01
.000
.00

-.005 -.01

-.02

-.010 -.03
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

18
 Effects of a monetary policy shock on GDP

Response of LGDP_LAT to Structural Response of LGDP_LAT to Structural

One S.D. Shock1 One S.D. Shock1

.3 .20

.15
.2
.10
.1
.05
.0
.00
-.1
-.05

-.2 -.10

-.3 -.15
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of LGDP_LAT to Structural

Response of LGDP_LAT to Structural
One S.D. Shock1
One S.D. Shock1
.4
.15
.3
.10
.2

.05 .1

.0
.00
-.1

-.05 -.2
-.3
-.10
-.4

-.15 -.5
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of LGDP_LAT to Structural Response of INFLATION_LAT to Structural

One S.D. Shock2 One S.D. Shock2
.06 .04

.04 .03

.02 .02

.00 .01

-.02 .00

-.04 -.01

-.06 -.02

-.08 -.03
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

19
 Effects of a monetary policy shock on Interest Rate

Response of IR_LAT to Structural

Response of IR_LAT to Structural One S.D. Shock1
One S.D. Shock1
.08
.010

.04
.005

.00
.000
-.04

-.005
-.08

-.010 -.12
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of IR_LAT to Structural Response of IR_LAT to Structural

One S.D. Shock2 One S.D. Shock2
.006 .03

.004 .02

.01
.002

.00
.000
-.01
-.002
-.02
-.004
-.03

-.006 -.04
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

20
Lithuania
Effects of a monetary policy shock on Money

Response of LM_LIT to Structural Response of LM_LIT to Structural

One S.D. Shock1 One S.D. Shock1
.16 .06

.12 .04

.08 .02

.04 .00

.00 -.02

-.04 -.04

-.08 -.06

-.12 -.08
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of LM_LIT to Structural

Response of LM_LIT to Structural
One S.D. Shock1 One S.D. Shock1
.3 .2

.2 .1

.0
.1
-.1
.0
-.2
-.1
-.3

-.2
-.4

-.3 -.5
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of LM_LIT to Structural Response of LM_LIT to Structural

One S.D. Shock2 One S.D. Shock2
.2 .3

.2
.1
.1

.0 .0

-.1
-.1
-.2

-.2 -.3
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

21
 Effects of a monetary policy shock on Inflation

Response of INFLATION_LIT to Structural Response of INFLATION_ES to Structural

One S.D. Shock1 One S.D. Shock1
.020 .04

.015 .03

.010 .02

.005 .01

.000 .00

-.005 -.01

-.010 -.02
-.015 -.03
-.020 -.04
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of INFLATION_LIT to Structural

Response of INFLATION_LIT to Structural
One S.D. Shock1
One S.D. Shock1
.04
.03
.03
.02
.02
.01 .01

.00 .00

-.01
-.01
-.02
-.02
-.03

-.03 -.04
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of INFLATION_LIT to Structural Response of INFLATION_LIT to Structural

One S.D. Shock2 One S.D. Shock2
.03 .12

.02
.08

.01
.04
.00
.00
-.01

-.04
-.02

-.03 -.08
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

22
 Effects of a monetary policy shock on GDP

Response of LGDP_LIT to Structural Response of LGDP_LIT to Structural

One S.D. Shock1 One S.D. Shock1
.15 .06

.04
.10
.02
.05
.00

.00 -.02

-.04
-.05
-.06
-.10
-.08

-.15 -.10
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of LGDP_LIT to Structural

Response of LGDP_LIT to Structural
One S.D. Shock1 One S.D. Shock1
.4 .10

.3 .05

.2 .00

.1 -.05

.0 -.10

-.1 -.15

-.2 -.20

-.3 -.25
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of LGDP_LIT to Structural Response of LGDP_LIT to Structural

One S.D. Shock2 One S.D. Shock2
.16 .15

.12 .10
.08
.05
.04
.00
.00
-.05
-.04
-.10
-.08

-.12 -.15

-.16 -.20
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

23
 Effects of a monetary policy shock on Interest Rate

Response of IR_LIT to Structural Response of IR_LIT to Structural

One S.D. Shock1 One S.D. Shock1

.06 .01

.04
.00
.02

.00 -.01

-.02
-.02
-.04

-.06 -.03
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

Response of IR_LIT to Structural Response of IR_LIT to Structural

One S.D. Shock2 One S.D. Shock2
.03 .03

.02
.02
.01
.01
.00
.00
-.01
-.01
-.02

-.02 -.03

-.03 -.04
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10

24