Browsing by Subject "EMU"

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  • Hlédik, Tibor (2003)
    Suomen Pankin keskustelualoitteita 35/2003
    The paper presents a structural model framework for a small open economy.The model, based on optimising households and firms, has been calibrated on Czech macroeconomic data in order to develop an analytic framework suitable for analysing key policy questions related to the Czech Republic s anticipated EMU accession.In order to be able to use the model for assessing both pre- and post-accession policy issues, two versions of the model fixed and flexible exchange rate versions were developed.The suitability of the two alternative models for policy analysis was subsequently tested on a series of impulse response exercises.The dynamic responses of the two models to selected shocks and policy experiments are plausible.Hence these results suggest that the presented analytic framework can serve as a good starting point for analysing complex policy issues facing the Czech Republic. Key words: monetary policy, monetary union, EMU accession JEL classification numbers: E52, E20, E31, F41
  • Liikanen, Erkki (2017)
    Bank of Finland. Bulletin 4/2017
    The amount of underutilized domestic capacity is expected to gradually be taken up, and the global economy's generally favourable outlook will support growth in the euro area. Together these factors support expectations that the inflation rate will slowly return to the policy objective.
  • Castrén, Olli (1999)
    Suomen Pankin keskustelualoitteita 2/1999
    This paper considers how the "true" common monetary policy that is conducted by the ECB under various sources of uncertainty will differ from the policy that was agreed in the Maastricht Treaty, and how the uncertainties may induce a representative government to criticise the common monetary policy.Acquiring information about the transmission mechanism, and revealing that information as well as information about the ECB reaction function, is incentive compatible for the ECB both directly and indirectly.The direct effect means that the ECB's own welfare is decreasing in uncertainties.The indirect effect arises because less uncertainty reduces the risk of criticism from the individual governments' side.The risk of criticism is the larger, and consequently the indirect incentive to reduce uncertainty is the higher, the larger are the leftward shifts in national political preferences from those that prevailed when the Maastricht Treaty was signed.The model also provides an explanation for the ECB's choice of monetary policy strategy that incorporates elements of both monetary targeting and inflation targeting. Keywords: Monetary uncertainty, monetary strategy, EMU.
  • Peisa, Paavo; Vehmas, Maritta (1998)
    Bank of Finland. Bulletin 72 ; 6-7 ; June-July
  • Korhonen, Iikka; Randveer, Mare (2000)
    BOFIT Online 1/2000
    This paper assesses the impacts of Economic and Monetary Union and the euro on developments within the eight most advanced accession candidates in Central and Eastern Europe.The single currency completes the project for a single market in Europe, and overall, clear efficiency gains for participating countries are expected. This should spur foreign trade with e.g. the accession countries. Accession candidates may use a variety of foreign exchange rate regimes before they join the EU, but ultimately their economic policies become a matter of common interest.Pressure to peg to the euro obviously increases as membership approaches, but there is compelling evidence that countries should hold back on pegging to the euro until they have achieved sufficient convergence to attain credibility for a policy of fixed exchange rates. Keywords: Economic and Monetary Union, Central and Eastern Europe, exchange rate policy, integration
  • Gächter, Simon; Riedl, Alesandra; Ritzberger-Grünwald, Doris (2013)
    BOFIT Discussion Papers 3/2013
    We analyze business cycle convergence in the EU by focusing on the decoupling vs. convergence hypothesis for central, eastern and south eastern Europe (CESEE). In a nutshell, we find that business cycles in CESEE have decoupled considerably from the euro area (EA) during the financial crisis in terms of both cyclical dispersion (i.e. the deviation of output gaps) and cyclical correlation. The results are mainly driven by smaller countries, which can be explained by the fact that small economies seem to have larger cyclical swings as they are more dependent on external demand, which causes a decoupling in terms of higher output gap deviations from the EA cycle in times of economic crises. At the same time, this does not necessarily affect business cycle synchronization as measured by cyclical correlations, where the strength of the linear relationship of two cycles is measured. However, despite the recent declines in the co-movement, we generally observe high correlation levels of CESEE countries with the EA after their EU accession in 2004. Finally, we find a significant decoupling of trend growth rates between EA and CESEE until the onset of the financial crises. Since the beginning of the crisis, trend growth rates have declined both in CESEE and the EA with the trend growth differential decreasing significantly from about three to below two percentage points in 2011. JEL classification: E32, E52, F15, F33, F44; Keywords: Business cycles, EMU, CESEE, optimum currency areas
  • Campos, Nauro F.; Fidrmuc, Jarko; Korhonen, Iikka (2019)
    International Review of Financial Analysis January
    Available also as Bank of Finland Research Discussion Papers 28/2017
    This paper offers a systematic evaluation of the evidence on the effects of currency unions on the synchronisation of economic activity. Focusing on Europe, we construct a database of about 3000 business cycles synchronisation coefficients including their design and estimation characteristics. We find that: (1) synchronisation increased from about 0.4 before the introduction of the euro in 1999 to 0.6 afterwards; (2) this increase occurred in both euro and non-euro countries (larger in former); and (3) there is evidence of country-specific publication bias.
  • Campos, Nauro F.; Jarko, Fidrmuc; Iikka, Korhonen (2017)
    Bank of Finland Research Discussion Papers 28/2017
    Available also in International Review of Financial Analysis 61 ; January ; 2019 https://doi.org/10.1016/j.irfa.2018.11.012
    This paper offers a first systematic evaluation of the evidence on the effects of currency unions on the synchronisation of economic activity. Focusing on Europe, we construct a database of about 3,000 business cycle synchronisation coefficients as well as their design and estimation characteristics. We find that: (1) synchronisation increased from about 0.4 before the introduction of the euro in 1999 to 0.6 afterwards; (2) this increase occurred in both euro and non-euro countries (larger in former); (3) there is evidence of country-specific publication bias; (4) our difference-in-differences estimates suggest the euro accounted for approximately half of the observed increase in synchronisation.
  • Kontulainen, Jarmo; Nieminen, Maritta (1998)
    Bank of Finland. Bulletin 72 ; 12 ; December
  • Putkuri, Hanna (2003)
    Suomen Pankin keskustelualoitteita 15/2003
    Since 1 January 1999 the ECB has conducted a single monetary policy in the euro area, but the mechanisms by which and the extent to which monetary shocks are transmitted into prices and real economic activity may vary from country to country.This paper investigates how and to what extent the impact of monetary policy depends on national features of financial systems.The main interest is in examining whether the bank lending channel of monetary policy results in asymmetric loan supply reactions on the aggregate level across countries. The variety of transmission mechanisms suggests that the potency of monetary policy may depend on several country-specific factors.On the basis of descriptive analysis, the present Member States seem to differ considerably in terms of their financial systems.The econometric analysis using aggregate data on a panel of twelve countries supports the view that some of these differences may lead to cross-country asymmetries in responses to the common monetary policy.In particular, a larger size and a lower degree of capitalisation of a banking sector are found to strengthen the bank lending channel on the aggregate level. Key words: EMU, monetary transmission, bank lending channel, panel data analysis
  • Brunila, Anne; Buti, Marco; Veld, Jan in't (2002)
    Suomen Pankin keskustelualoitteita 6/2002
    It is widely recognised that fiscal policy will have greater responsibilities for cyclical stabilisation in the EMU, given the loss of the monetary instrument at national level.At the same time, the EMU's budgetary framework emphasises the need to rely on automatic fiscal stabilisers, rather than active policies, in cushioning the business cycle.We show that automatic stabilisers are relatively powerful in the event of a shock to private consumption, but less so as regards shocks to private investment and exports.In respect of supply side shocks, automatic stabilisers are largely ineffective, which may in fact be a good thing to the extent that supply-side disturbances call for structural adjustment rather than cyclical stabilisation.Looking ahead, one of the challenges facing policy-makers will be how to design tax and welfare reforms which, while improving incentives and market functioning, do not stifle - and in fact could strengthen - the impact of automatic stabilisers. Key words: cyclical stabilisation, automatic stabilisers, Stability and Growth Pact
  • Christiansen, Bent; Gudmundsson, Már; Lehmussaari, Olli-Pekka; Lindenius, Christina; Simonsen, Sigurd; Starck, Christian; Åkerholm, Johnny (1992)
    Bank of Finland Research Discussion Papers 20/1992
    Integrationsprocessen inom Europa får via Maastrichtavtalet långtgående konsekvenser för de nordiska centralbankerna oavsett de strategiska valen. Förändringstrycket uppstår de Jaeta pga att de nordiska ländema inte kan agera i isolation från utvecklingen i den omedelbara omvärlden. EG-Iändernas ekonomisk-politiska beslut kommer att i hög grad ange ramama för den ekonomiska politiken i de nordiska Iänderna oberoende av de institutionella arrangemangen.
  • Rehn, Olli (2019)
    Bank of Finland Bulletin. Blog
    Conducting monetary policy in the current low inflation and low interest rate environment is a case apart, unlike the ‘old normal’. The Bank of Finland organized an international research conference to discuss this dilemma, and two key topics in particular: the challenges of monetary policy and the future of European Monetary Union.
  • Björkstén, Nils; Syrjänen, Miika (1999)
    Suomen Pankin keskustelualoitteita 11/1999
    Evidence suggests that after a period of convergence in the early and mid 1990s, the euro area economies may have started diverging. As a consequence, the common monetary policy could become less well-suited for a number of countries.This paper studies the extent and severity of the recent divergences, and discusses the capacity of exposed countries to compensate for nationally suboptimal monetary conditions through other policy channels.As a step toward developing an analytical framework for monitoring intra-euro area developments, we present a "convergence barometer" to monitor divergences, and a Taylor rule based "monetary thermometer" to compare the common monetary policy to benchmark optimal policy for individual countries.A main conclusion is that policyrnakers at the euro area level should be concerned about divergences, since automatic stabilisers alone may not be enough to restore a healthy equilibrium to potential "outlier" countries.
  • Paloviita, Maritta (2008)
    Suomen Pankki. E 40
    1 Introduction . 10 2 Alternative models for optimal price setting 16 2.1 Basic model with endogenous supply 17 2.2 Optimal price setting models . 21 2.2.1 Optimal price setting with fully flexible prices 21 2.2.2 Optimal non-overlapping price setting with nominal rigidities . 23 2.2.3 Optimal overlapping price setting with nominal rigidities . 26 3 Three Phillips curve relationships 28 3.1 The New Classical Phillips curve 29 3.2 The New Keynesian Phillips curve 31 3.3 The Hybrid Phillips curve 34 4 Related studies 36 5 Review of the articles 41 References 44
  • Montamen-Scobie, Homa; Starck, Cristian C. (1992)
    Bank of Finland. C 8
    This book emerges from a workshop that was jointly organised by the Bank of Finland and the European Economics and Financial Centre and took place in Helsinki during 12-14 January 1992. The workshop, entitled "Economic Policy Coordination", was hosted by the Bank of Finland and was the first of a series. A second workshop will be hosted by the Central Bank of The Netherlands during 4-6 November 1992 and a third will be held at the Bank of Austria in early 1993.
  • Lehtonen, Martti; Jokinen, Helka (1998)
    Bank of Finland. Bulletin 72 ; 3 ; March
  • Kokkola, Tom; Pauli, Ralf (1994)
    Bank of Finland. Bulletin 68 ; 12 ; December
  • Ollila, Esko (1998)
    Bank of Finland. Bulletin 72 ; 3 ; March
  • Malkamäki, Markku; Saukkonen, Erja (1997)
    Bank of Finland. Bulletin 71 ; 9 ; September