One of the reasons that VAE with LSTM as a decoder is less effective than LSTM language model due to the LSTM decoder ignores conditioning information from the encoder. This paper uses a dilated CNN as a decoder to improve a perplexity on held-out data.
The language model can be modeled as:
LSTM language model use this conditional distribution to predict the next word.
By adding an additional contextual random variable , the language model can be expressed as:
The second model is more flexible as it explicitly model a high variation in the sequential data. Without a careful training, the VAE-based language model often degrades to a standard language model as the decoder chooses to ignore the latent variable generated by the encoder.
The authors replace LSTM decoder with Dilated CNN decoder to control the contextual capacity. That is when the convolutional kernel is large, the decoder covers longer context as it resembles an LSTM. But if the kernel becomes smaller, the model becomes more like a bag-of-word. The size of kernel controls the contextual capacity which is how much the past context we want to use to predict the current word.
Stacking Dilated CNN is crucial for a better performance because we want to exponentially increase the context windows. WaveNet  also uses this approach.
By replacing VAE with a more suitable decoder, VAE can now perform well on language model task. Since the textual sequence does not contain a lot of variation, we may not notice an obvious improvement. We may see more significant improvement in a more complex sequential data such as speech or audio signals. Also, the experimental results show that Dilated CNN is better than LSTM as a decoder but the improvement in terms of perplexity and NLL are still incremental to the standard LSTM language model. We hope to see stronger language models using VAE in the future.
 Yang, Zichao, et al. “Improved Variational Autoencoders for Text Modeling using Dilated Convolutions.” arXiv preprint arXiv:1702.08139 (2017).
 Bowman, Samuel R., et al. “Generating sentences from a continuous space.” arXiv preprint arXiv:1511.06349 (2015).
 Oord, Aaron van den, et al. “Wavenet: A generative model for raw audio.” arXiv preprint arXiv:1609.03499 (2016).