Browsing by Subject "D81"

Sort by: Order: Results:

Now showing items 1-6 of 6
  • König-Kersting, Christian; Trautmann, Stefan T.; Vlahu, Razvan (2020)
    Bank of Finland Research Discussion Papers 14/2020
    We study the impact of disclosure about bank fundamentals on depositors’ behavior in the presence (and absence) of economic linkages between financial institutions. Using a controlled laboratory environment, we identify under which conditions disclosure is conducive to bank stability. We find that bank deposits are sensitive to perceived bank performance. While banks with strong fundamentals benefit from more precise disclosure, an opposing effect is present for solvent banks with weaker fundamentals. Depositors take information about economic linkages into account and correctly identify when disclosure about one institution conveys meaningful information for others. Our findings highlight both the costs and benefits of bank transparency and suggest that disclosure is not always stability enhancing.
  • Chen, Yu-Fu; Funke, Michael (2008)
    BOFIT Discussion Papers 29/2008
    Published in China Economic Review 20 (3), 2009, pp. 558-572
    In January 2008, China adopted a new labour contract law. This new law represents the most significant reform to the legislation on employment relations in mainland China in more than a decade. The paper provides a theoretical framework on the inter-linkages between labour market regulation, option value and the choice and timing of employment. All in all, the paper demonstrates that the Labour Contract Law in its own right will have only small impacts upon employment in the fast-growing Chinese economy. Rather, induced increasing unit labour costs represent the real issue and may reduce employment. JEL-Classification: C61, D81, D92, J23 Keywords: China, labour contract law, real options, employment
  • Ellison, Martin; Sarno, Lucio; Vilmunen, Jouko (2004)
    Suomen Pankin keskustelualoitteita 3/2004
    Published in Macroeconomic Dynamics, Volume 11, No. 4, September 2007 , pp. 519-541
    In this paper, we examine the incentives for central bank activism and caution in a two-country open-economy model with uncertainty and learning.We find that the presence of a strategic interaction between the home and foreign central banks creates an additional motivation for caution in monetary policy.An activist policy designed to help the learning of the home central bank is suboptimal since it generates a strong reaction from the foreign central bank.As joint learning by the home and foreign central banks is shown to be detrimental to welfare, the optimal policy is cautious. Key words: activism, learning, monetary policy, open economy JEL classification numbers: D81, D83, E52, E58, F41
  • Viaene, Jean-Marie; Zilcha, Itzhak (1995)
    Suomen Pankin keskustelualoitteita 3/1995
    The optimum behavior of a competitive risk-averse international trader who supplies or demands commodities invoiced in foreign currency is examined when his profits are subject to several forms of risk: production, domestic cost, the exchange rate and the commodity price.The focus of the analysis lies in the optimality conditions for the level of trade and the extent of forward exchange and commodity futures commitments.New results on the implications of the framework for the separation and the double-hedging theorems are derived.The behavior of the same firm with and without complete markets is compared and conditions are obtained for a domestic price guarantee or a gradual introduction of missing markets to promote the level of international trade. (JEL D81, D84, F19, F31)
  • Kilponen, Juha (2004)
    Suomen Pankin keskustelualoitteita 5/2004
    This paper extends Svensson and Woodford's (2003) partial information framework by allowing the private agents to achieve robustness against incomplete information about the structure of the economy by distorting their expectations in a particular direction.It shows how a linear rational expectations equilibrium under concern for robustness can be solved by exploiting the recursive structure of the problem and appropriately modifying the Bellman equations in their framework.The standard Kalman filter is then used for information updating under imperfect measurement of the state variables.The standard New Keynesian model is used for illustrating how concern for modelling errors interacts with imperfect information.Agents achieve robustness by simultaneously over-estimating the persistence of exogenous shocks, but under-estimating the policy response to the output gap.This under-estimation, combined with imperfect measurement, leads to larger and more persistent responses of private consumption to government expenditure shocks under robust expectations. Key words: expectations, robust control, model uncertainty, monetary policy, imperfect information JEL classification numbers: D81, C61, E52
  • Ellison, Martin; Sargent, Thomas J. (2012)
    Bank of Finland Research Discussion Papers 25/2012
    The welfare cost of random consumption fluctuations is known from De Santis (2007) to be increasing in the level of individual consumption risk in the economy. It is also known from Barillas et al. (2009) to increase if agents in the economy care about robustness to model misspecification. In this paper, we combine these two effects and calculate the cost of business cycles in an economy with consumers who face individual consumption risk and who fear model misspecification. We find that individual risk has a greater impact on the cost of business cycles if agents already have a preference for robustness. Correspondingly, we find that endowing agents with concerns about a preference for robustness is more costly if there is already individual risk in the economy. The combined effect exceeds the sum of the individual effects. JEL classification: E32, E63, D81 Keywords: Cost of Business Cycles, Idiosyncratic Risk, Model Uncertainty, Robustness