Browsing by Author "Ripatti, Antti"

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  • Kilponen, Juha; Ripatti, Antti; Vilmunen, Jouko (2004)
    EURO & TALOUS 3
  • Kilponen, Juha; Ripatti, Antti; Vilmunen, Jouko (2004)
    Bank of Finland. Bulletin 78 ; 3
  • Newby, Elisa; Railavo, Jukka; Ripatti, Antti (2011)
    Bank of Finland bulletin. Economic outlook 3
    The purpose of economic forecasts is to support economic agents decision-making by providing a coherent picture of the present state of the economy and the outlook for the future. Since 2004, a key tool for preparing the Bank of Finland s forecast has been the Aino model.1 It is employed as a tool for integrating forecast information. The new version of the Aino model was introduced in the preparation of the March 2010 forecast. This article describes the features of the model and its use in the preparation of forecasts.
  • Ripatti, Antti; Saikkonen, Pentti (1998)
    Suomen Pankin keskustelualoitteita 29/1998
    We extend the conventional cointegrated VAR model to allow for general nonlinear deterministic trends.These nonlinear trends can be used to model gradual structural changes in the intercept term of the cointegrating relations.A general asymptotic theory of estimation and statistical inference is reviewed and a diagnostic test for testing the correct specification of an employed nonlinear trend is developed.The methods are applied to Finnish interest rate data.A smooth level shift of the logistic form between the own-yield of broad money and the short-term money market rate is found appropriate for these data.The level shift is motivated by the deregulation of issuing certificates of deposit and its inclusion in the model solves the puzzle of 'missing cointegration vector' found in a previous study. Keywords: cointegrated VAR model, gradual structural change, nonlinear deterministic trend
  • Ripatti, Antti; Vilmunen, Jouko (2001)
    Suomen Pankin keskustelualoitteita; Bank of Finland. Discussion papers 10/2001
    The study demonstrates that the decline in the labour share in Finland can not be explained by the Cobb-Douglas production function.Instead, we propose an approach based on the constant-elasticity-of-substitution (CES) production function with labour- and capital-augmenting technical progress.The model is augmented by imperfect competition in the output market.According to the empirical results based on estimation of the first-order-conditions, the technical elasticity of substitution is significantly less than unity (0.6) and hence the Cobb-Douglas production function is rejected.The growth rate of the estimated labour-augmenting technical progress has decreased in recent years, which is not consistent with the 'new-economy' hypothesis. Capital-augmenting technical trend has exploded during the same period, which provides a possible explanation for the rapid growth of the Solow residual.The main contributing factor behind the declining labour share is, however, the increasing mark-up. Keywords: production function, elasticity of technical substitution, input-augmenting technical progress, new economy
  • Ripatti, Antti (1992)
    Bank of Finland. Bulletin 66 ; 12 ; December
  • Ripatti, Antti (1998)
    Suomen Pankki. E 13
    In order to study the role of money in an inflation-targeting regime for monetary policy, we compare the interest rate and money as monetary policy instruments.The theoretical part of the study builds on a dynamic stochastic general equilibrium model that combines the money-in-the-utility-function approach with sticky prices.Preference and technology shocks are the driving forces of the economy.We show that conditioning the interest rate on the expected future cost change can be used to achieve constant inflation or constant inflation expectations.The assumed adjustment costs in 'money demand' lead to an equilibrium in which inflation can be controlled by money growth without having information on the current state of the economy.The tradeoff between money and the interest rate as a monetary policy instrument depends on the parameter stability of the technology change process relative to that of the 'money demand' function. We experiment with the parameter stability of the demand for money using Finnish monthly data for 1980 - 1995.The steadystate - utility function - parameters of the model of narrow money (M1), estimated with cointegration techniques, are stable; whereas in the model of harmonized M3 (M3H) the parameters are not stable.The theoretical model fits the M1 data.The adjustment cost parameters of the M1 model describing the dynamics of the demand for money could indicate the occurrence of technological improvements in banking and payments during the sample period.These results suggest that from the Finnish viewpoint M1 would be a more appropriate intermediate target for monetary policy than harmonized M3.Due to small sample problems, we compare parameters of the theoretical model estimated using the Generalized Method of Moments and Full Information Maximum Likelihood method.The process driving the forcing variables is approximated with vector autoregression. Both the GMM and FIML parameter estimates are reasonable and the differences are negligible.The cross-equation restrictions implied by the rational expectations hypothesis are clearly rejected. Keywords: demand for money, monetary transmission, money-in-the-utility-function, sticky prices, technology shock, GMM, FIML
  • Ripatti, Antti (1998)
    Bank of Finland. Bulletin 72 ; 11 ; November
  • Ripatti, Antti (1994)
    Bank of Finland. Series D 79
    The study is organized in four parts as follows: In part 1, we survey the theoretical models of the demand for money and derive a dynamic framework. Part 2 presents the econometric methods to be used in part 4 of the study. The data and the institutions as well as earlier results and testable hypotheses are presented in part 3.
  • Newby, Elisa; Railavo, Jukka; Ripatti, Antti (2011)
    Euro & talous. Talouden näkymät 3
    Talousennusteilla pyritään tukemaan taloudenpitäjien päätöksentekoa luomalla johdonmukainen kuva talouden nykyhetkestä ja tulevaisuudennäkymistä. Suomen Pankin keskeisenä ennustetyökaluna on vuodesta 2004 lähtien ollut Aino-malli1.Mallia käytetään ennusteessa kokoavana välineenä. Aino-mallin uusi estimoitu versio otettiin ennustekäyttöön maaliskuun 2010 ennusteessa. Tässä artikkelissa kuvataan sekä mallin piirteitä että mallin hyödyntämistä ennusteiden laadinnassa.
  • Kilponen, Juha; Ripatti, Antti (2005)
    Bank of Finland. Bulletin 1
  • Ripatti, Antti (1997)
    Suomen Pankin keskustelualoitteita 17/1997
    In order to study the role of money in an inflation targeting regime for monetary policy, we compare the interest rate and money as monetary policy instruments.Our dynamic stochastic general equilibrium model combines the money-in-the-utility-function approach with sticky prices.We allow for time-varying preferences for real money balances, ie velocity shocks, and stochastic aggregate costs in production, ie 'technology shocks'.We show that conditioning the interest rate on the expected future cost change can be used to achieve constant inflation or constant inflation expectations.The assumed adjustment costs in 'money demand' lead to an equilibrium in which inflation can be controlled by money growth without information on the current state of the economy. Finally, we discuss the tradeoff between money and the interest rate as a monetary policy instrument.The result depends on the parameter stability of the cost change process relative to that of the 'money demand' function. Keywords: monetary transmission mechanism, money-in-the-utility-function model, sticky prices, technology shock, monetary policy strategy.JEL classification: E31, E41, E52
  • Kilponen, Juha; Ripatti, Antti (2005)
    EURO & TALOUS 1
  • Kilponen, Juha; Ripatti, Antti (2006)
    Bank of Finland Research Discussion Papers 5/2006
    Using the DGE model of the Finnish Economy (the 'Aino' model), we study the response of the economy to reforms in both labour and product markets.The reforms are two-fold.We assume that the wage mark-up, ie the monopoly power of wage-setters is gradually reduced by 5 percentage points.At the same time, the degree of competition is increased, ie price margins are exogenously reduced by 2 percentage points.These reforms imply a very favourable outcome of the economy.Both consumption and employment increases permanently and the reforms are welfare enhancing.Public balances improve giving room for 1.5 percentage point cut in income taxes.Our simulation exercises clearly demonstrate that such reforms may help in financing the future fiscal burden of an ageing population. Key words: competition, dynamic general equilibrium, public finance JEL classification numbers: E60, C68
  • Ripatti, Antti (1995)
    Suomen Pankin keskustelualoitteita 24/1995
    We analyse a set of macroeconomic variables in order to evaluate their ability to (linearly) predict inflation.A series of tests is conducted in which the consumer price index is paired with a single macroeconomic variable, such as monetary or credit aggregate, an interest rate, an asset price, a survey variable and or some other nominal or real variables.Using bivariate autoregressive models, hypot- heses concerning cointegration and causality between price level and the particular macroeconomic variable are tested. Only in a few cases is cointegration found.We conclude that in general yield indices and cost variables cointegrate and predict inflation over a one-year horizon.Variables concerning economic activity, broad monetary aggregates and certain interest rates predict inflation about one year ahead.However, most of the variables of our dataset perform poorly as leading indicators of inflation.
  • Ripatti, Antti (1997)
    Suomen Pankin keskustelualoitteita 3/1997
    We compare parameter estimates of the intertemporal money-in-the-utility-function model estimated using the Generalized Method of Moments and the Full Information Maximum Likelihood method.The process driving the forcing variables is approximated with vector autoregression.The FIML estimates of the deep parameters are reasonable, although some of them differ from the corresponding GMM estimates.The simulation experiments suggest that the differences are not very big in practice and that they are connected with adjustment costs.The cross-equation restrictions are clearly rejected, as is typical for these kinds of models; exogeneity restrictions are rejected as well. Keywords: money-in-the-utility-function model, demand for money, narrow money, Generalized Method of Moments, Full Information Maximum Likelihood
  • Saikkonen, Pentti; Ripatti, Antti (1999)
    Suomen Pankin keskustelualoitteita; Bank of Finland. Discussion papers 6/1999
    The concept of a peso problem is formalized in terms of a linear Euler equation and a nonlinear marginal model describing the dynamics of the exogenous driving process.It is shown that, using a threshold autoregressive model as a marginal model, it is possible to produce time-varying peso premia.A Monte Carlo method and a method based on the numerical solution of integral equations are considered as tools for computing conditional future expectations in the marginal model.A Monte Carlo study illustrates the poor performance of the generalized method of moment (GMM) estimator in small and even relatively large samples.The poor performance is particularly acute in the presence of a peso problem but is also serious in the simple linear case. Keywords: peso problem, Euler equations, GMM, threshold autoregressive models.
  • Kilponen, Juha; Kinnunen, Helvi; Ripatti, Antti (2006)
    Bank of Finland Research Discussion Papers 28/2006
    This paper extends Gertler's (1999) tractable overlapping generations model with life-cycle features by allowing for distortionary taxation, demographic transition and stochastic variation in demographic structure.The model is then used to study demographic change in the small open economy of Finland. Simulations highlight the key role played by labour market responses to ageing.When the responses of labour supply, wages, and hence private consumption, to higher taxation are consistently accounted for, population ageing has clearly much larger effects on public finance, when compared to mechanical sustainability calculations.Stochastic simulations suggest that lengthening of working time has only a modest alleviating effect on the fiscal burden of ageing.This is due to the fact that stochastic variation in the length of working time has only a relatively small effect on the model's dependency ratio.Variation in life expectancy is clearly much more important. Key words: ageing, general equilibrium, public finance, demographic uncertainty JEL classification numbers: E13, H55, J11, J26
  • Pikkarainen, Pentti; Ripatti, Antti (1995)
    MARKKA & TALOUS 2
    Ennustaessaan talouden kehitystä keskuspankit käyttävät hyväkseen välitavoitteita ja indikaattoreita.Niiden välittämien viestien perusteella rahapolitiikan lopputavoitteen - Suomessa pohjainflaation saavuttamista pystytään ennustamaan myös pidempiä ajanjaksoja etukäteen.
  • Ripatti, Antti; Vilmunen, Jouko (1995)
    Suomen Pankin keskustelualoitteita 32/1995
    Under certain assumptions, the permanent income model yields the result that prices of different products share common stochastic trends.We construct four price series from the components of the consumer price index, combine this four variable system with various macroeconomic variables, such as broad money (M2), nominal exchange rates, import and export prices in domestic currency etc., with the ultimate hope of capturing empirical regularities between this price structure and the proposed macroeconomic information.It is found that broad money, money market and bond yield indices, nominal exchange rates and import prices contain long-run information about the price level.We also find that the common trends of price groups cointegrate with the broad monetary aggregate and the money market yield index, indicating that these variables might be the driving forces of underlying inflation.