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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
  • Andersen, Kaare Guttorm; Kauko, Karlo (1996)
    Suomen Pankin keskustelualoitteita 13/1996
    The possibilities to improve households' eligibility for long-term housing loans at fixed interest rates has been a current topic of public discussion.Yet, credit institutions have difficulties in granting such loans, unless they themselves can acquire fixed-rate funding.In many cases, the only feasible way for them to raise such funding is to issue bonds.In a number of countries, such arrangements are already in use. In this paper we present a cross-country study of housing finance by mortgagebacked bonds.The paper describes and analyses mortgage credit markets in Denmark, Sweden and the United States of America with respect to the institutional structure, loans and bonds characteristics, legal framework and the security underlying the system.We have found that all three markets differ and that these differences originate from the respective countries' national characteristics and financial histories.In Sweden and the United States in particular, the public sector has been involved in developing the system. Generally, long-term credit is offered in all three countries through relatively well-functioning, efficient markets. However, certain problems are common to all.First, the number of outstanding bond series is relatively large.Second, in many housing loans, the borrower has the option to repay the debt prematurely.In these cases, the credit institution may have to avoid maturity matching problems by issuing bonds with unknown maturity. We briefly review the history and present circumstances of Finnish bond issuing credit institutions to elucidate why such institutions play a marginal role.Long ago, bond-issuing mortgage institutions were an essential part of the Finnish financial market, but legislative obstacles to their operations almost killed the industry after World War II.The tax system favoured ordinary banks, and bond emissions were restricted by government regulations.Now, these legal obstacles have been abolished.In the light of both foreign and past domestic experience, such institutions have a market niche.Finally, we discuss some of the problems related to setting up a bond- financed mortgage credit market in Finland. Key words: Housing loans, bonds, mortgage banks
  • Sipilä, Kari T. (1996)
    Suomen Pankin keskustelualoitteita 1/1996
    The study assesses data communication requirements within the EU as it concerns Member State officials, EU bodies and the Community.A survey of current projects and their backgrounds is given.In addition the division of responsibilities among various bodies of the Commission are discussed. Given the EU's need for some sort of integration of data transfer services is self evident, the study investigates what possible challenges lie ahead as EU integration processes continue and its already large communications requirements continue to grow.For example, while the Commission as well as its empowered bodies have recognized the need for a unified communications architecture, the political will to implement such as system has been lacking.The report recommends the creation of a unified, universal communications architecture, that not only can handle all current types of data transfer, but anticipates growth as well. Key words: The European Union, A Data communication, The Authorities
  • Mayes, David G. (1997)
    Suomen Pankin keskustelualoitteita 18/1997
    Viimeisen vuosikymmenen pankkikriisit ovat herättäneet huolestumista monissa teollisuusmaissa.Tässä raportissa tarkastellaan Uudessa-Seelannissa vuonna 1996 käyttöön otetun, julkistamisperiaatteeseen nojautuvan pankkivalvontajärjestelmän etuja.Vaikka Uudella-Seelannilla on monia erityispiirteitä, jotka tekevät uudesta järjestelmästä juuri sille erityisen soveliaan, soveltuvat järjestelmän kaikki pääperiaatteet muuhunkin OECD-alueeseen, myös nykyisen EU-lainsäädännön yhteyteen.Nämä periaatteet ovat seuraavat: 1) yritysjohdon kontrollin laadun varmistaminen ja laadukkaat laskentatoimen ja riippumattoman tilintarkastuksen standardit rahoituslaitoksissa, jotka haluavat pankkitoimiluvan 2) markkinakurin edellyttämän konkreettisen informaation julkistaminen yksittäisten pankkien riskinotosta; informaatioon on sisällyttävä pankkien koko toimintaa koskevat value-at-risk -laskelmat 3) pankkien johdon ja hallinnon pitäminen vastuullisina pankkien liiketoiminnan asiaankuuluvasta varovaisuudesta; tähän kuuluvat rangaistukset ja taloudellinen vastuu virheellisistä tiedoista 4) veronmaksajien varojen vaarantamisen välttäminen antamalla ymmärtää, että mikään pankki ei ole liian iso kaatumaan, ja keskittämällä valvontaviranomaisten toimet sen varmistamiseen, että ne voivat puuttua asioihin ja estää koko rahoitusjärjestelmän kannalta haitalliset seuraukset yksittäisen pankin joutuessa vaikeuksiin. Näillä keinoin voidaan merkittävästi vähentää pankkivalvontaan liittyvää moraalikatoa ja valvonnan kustannuksia. Asiasanat: rahoitusmarkkinoiden valvonta, markkinakuri, järjestelmän vakaus
  • Jokivuolle, Esa; Peura, Samu (2000)
    Suomen Pankin keskustelualoitteita 2/2000
    We present a model of risky debt in which collateral value is correlated with the possibility of default.The model is then used to study: 1) the expected amount of debt recovered in the event of default as a function of collateral; and 2) the amount of collateral needed to mitigate the riskiness of a loan to a desired degree.The results obtained could prove useful for estimating recovery rates required by many popular models of credit risk and for determining collateral haircuts in debt transactions.The analysis also generates testable predictions of the behaviour of historical recovery rates of risky debt when collateral is involved.Regulators might benefit from the analysis in developing capital adequacy requirements and reviewing banks' lending standards relative to current collateral values.
  • Tarkka, Juha (1997)
    Suomen Pankin keskustelualoitteita 15/1997
    This paper analyses the prerequisites for and the results of unanimous monetary policy decisions in a monetary union consisting of heterogeneous members.The analysis is based on a multicountry version of Rogoff's model of the determination of monetary policy in the presence of supply shocks.It is shown that an international transfer system can be designed which creates consensus both on the average rate of inflation and the common response to asymmetric shocks to the participating economies.We conjecture that this kind of transfer mechanisms, institutionalized or informal, supporting joint decisions tend to evolve in contexts where there is strong aversion of disagreement.Monetary policy is arguably such a context, because frequent disagreement within the decision-making body could be harmful to credibility. The transfer system capable of supporting consensus on monetary policy can be based on activity-related, automatic subsidies for countries which would individually prefer lower inflation rates, and activity-related taxes for countries which would prefer higher inflation in absence of the transfer system. It turns out that the common monetary policy created by unanimous decisions under the supporting transfer mechanism can be characterized as a weighted average of the national "stand-alone" inflation rates, i.e. the rates which would prevail without the monetary union.The weights of the countries are not related to the sizes of the national economies, but rather to the national attitudes towards inflation and transfer income.Countries with a low stand-alone rate of inflation get a large weight in the determination of the common monetary policy, as do the countries which have a relatively low marginal valuation of international transfer income. Keywords: Positive inflation theory, monetary union, monetary policy
  • Holm, Pasi; Honkapohja, Seppo; Koskela, Erkki (1990)
    Bank of Finland Research Discussion Papers 24/1990
    The paper formulates a model of wage determination in accordance with the notion of a monopoly union determining wages after which the firm decides on employment. The novelty is to incorporate investment and capital decisions by firms. In the theoretical part the subgame-perfect Nash equilibrium and its comparative statics for wages, capital stock and employment are characterized in various cases.
  • Virén, Matti (1990)
    Bank of Finland Research Discussion Papers 19/1990
    This note presents new evidence on Finnish property criminality. The analysis is based on Earlichls (1973) model; the empirical an~lysis makes use af annual Finnish data for the period 1951 - 1986. The estimation results strongly support the notion that both the appreh~nsion rate and the severity of punishment have a strong deterrence effect on larcenies and robberies.
  • Virén, Matti (1989)
    Bank of Finland Research Discussion Papers 2/1989
    This paper presents some analyses of interest rate determination in six industrialized countries during the Great Depression. The main finding of the paper is that the huge real interest rate shocks experienced during that time were mainly due to policy actions by central banks.
  • Kilponen, Juha (2003)
    Suomen Pankin keskustelualoitteita 18/2003
    This paper applies the robust control approach to a simple positive theory of monetary policy, when the central bank's model of the economy is subject to misspecifications.It is shown that a central bank should react more aggressively to supply shocks when the model misspecifications grow larger.Moreover, the model misspecifications aggravate the inflation bias and a trade-off between output stabilisation and inflation worsens when the uncertainty surrounding the central bank's model increases.This implies that the larger the model misspecifications are, the more inflation-averse the central bank should be. Key words: risk-sensitivity, robust control theory, monetary policy, Brainard conservatism, model uncertainty JEL classification numbers: E58
  • Lukkarila, Johanna (2003)
    Suomen Pankin keskustelualoitteita 3/2003
    Monet maat ovat 1990-luvun alun jälkeen luopuneet kiinteän mutta ajoittain muutettavan valuuttakurssin järjestelmästä.Tässä työssä arvioidaan, miten Aasian tapahtumien jälkeen kehitellyt niin kutsutut kolmannen sukupolven valuuttakriisimallit selittävät Aasian kriisiä.Lisäksi teorioita ja Aasian tapahtumia verrataan Venäjän ja Turkin viimeisiin rahoituskriiseihin.Tarkastelu osoittaa, etteivät perinteiset teoriat ole menettäneet merkitystään kriisien selittäjinä.Uusia malleja ja mallien yhdistämistä kuitenkin tarvitaan, sillä viimeaikaisiin kriiseihin on yhä useammin liittynyt sekä pankki- että valuuttakriisien piirteitä.Avain-sanat: valuuttakriisit, pankkikriisit, kehittyvät markkinat, Aasia, Turkki, Venäjä JEL-luokittelu: F31, F32, F41
  • 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.
  • Kortelainen, Mika (2001)
    Suomen Pankin keskustelualoitteita 3/2001
    We present a dynamic general equilibrium model with some nominal rigidities and calibrate it to euro area data.The most important features of the model include consumption/saving decisions according to Blanchard's stochastic lifetimes approach; valuation of private financial wealth according to the present value of capital income; overlapping Calvo wage contracts in the labour market; and a neoclassical supply side with Cobb-Douglas technology.The model is developed for use in analysing differences between perceived and actual monetary policy rules, which is then done as a means of evaluating the macroeconomic benefits of credibility in monetary policy.General properties of the model are analysed with a variety of simulation experiments.Key words: EDGE, rational expectation, DGE models, nominal rigidites
  • Evans, George W.; Honkapohja, Seppo (2002)
    Suomen Pankin keskustelualoitteita 29/2002
    We review the recent work on interest rate setting, which emphasizes the desirability of designing policy to ensure stability under private agent learning.Appropriately designed expectations based rules can yield optimal rational expectations equilibria that are both determinate and stable under learning.Some simple instrument rules and approximate targeting rules also have these desirable properties.We take up various complications in implementing optimal policy, including the observability of key variables and the required knowledge of structural parameters.An additional issue that we take up concerns the implications of expectation shocks not arising from transitional learning effects. Key words: commitment, interest rate setting, adaptive learning, stability, determinacy, expectations shocks JEL classification numbers: E52, E31, D84
  • Rantala, Anssi (2003)
    Suomen Pankin keskustelualoitteita 30/2003
    This paper demonstrates that the adaptive learning approach to modelling private sector expectations can be used as an equilibriumselection mechanism in a natural-rate monetary model with unemployment persistence.In particular, it is shown that only one of the two rational expectations equilibria is stable under least-squares learning, and that it is always the low-inflation equilibrium with intuitive comparative statics properties that is the learnable equilibrium.Hence, this paper provides a basic theoretical justification for focusing on the lowinflation equilibrium.Earlier contributions, in which the high-inflation equilibrium was ignored, mainly because of its unpleasant characteristics, are not theoretically satisfactory.Key words: adaptive learning, monetary policy, multiple equilibria, persistence JEL classification numbers: C62, D83, D84, E52
  • Koskela, Erkki; Stenbacka, Rune (2000)
    Suomen Pankin keskustelualoitteita 12/2000
    We address the question of how lending market competition, measured by the bargaining power of banks, affects the agency costs of debt finance.It is shown that intensified lending market competition will lead to lower lending rates and investment return distributions which are shifted towards lower, but less risky returns.Consequently, it follows that increased lending market competition will reduce the agency cost of debt financing.Hence, our analysis does not lend support to the commonly held view that there would be a trade-off between more intensive lending market competition and higher agency costs of debt finance.
  • Kajanoja, Lauri (1995)
    Suomen Pankin keskustelualoitteita 10/1995
    The purpose of this study was to examine whether evidence of the possible effects of firms' indebtedness on their investment decisions can be found in empirical aggregate investment equations. Three different types of equations for aggregate investment in Finland were estimated.The equations were estimated separately for manufacturing and nonmanufacturing investment.An indebtedness variable was used as an additional explanatory variable in every equation.The results support the view that nonmanufacturing firms' indebtedness has had a negative effect on their investment in Finland.In the manufacturing sector no such evidence was found.
  • Peisa, Paavo (1989)
    Bank of Finland Research Discussion Papers 16/1989
    This paper evaluates the power of aggregate and sector-specific disturbances ta output growth in the Finnish econc:Jrqy using armual data on the growth of value added in 31 industries over the period 1961-87. The unifonn power distribution assumptions implicit in the standa.J:d randam and fixed effects m:rlels are considered and tested by analyzing the power of disturbances by frequency band.
  • Virén, Matti (1990)
    Bank of Finland Research Discussion Papers 15/1990
    This paper reports some policy simulations carried out with the Finnish MICRO-QMED model. This rational expectations model built at the Economics Department of Bank of Finland is used to evaluate the short-run effects of some anticipated policy actions. The role of alternative (income) policy rules is also assessed.All these experiments demonstr-ate the importance of advance effects. In addition, they underline the importance of knowing the nature of the policy actions and the expectations horizon of economic agents. The paper also contains a short desc~iption of the MICRO-QMED model and its computational properties.
  • Mayes, David G. (2004)
    Suomen Pankin keskustelualoitteita 4/2004
    Published in Journal of Banking and Finance, Vol. 29, No. 1 (Special Issue), January 2005: 161-181
    In the light of the inequity of the way losses from bank insolvencies and their avoidance through intervention by the authorities have been distributed over creditors, depositors, owners and the population at large in transition and emerging economies, this paper explores a number of regulatory reforms that would alter the balance between seeking to avoid insolvency and lowering the costs of insolvency should it occur.In particular it considers whether a lex specialis for dealing with banks that are in trouble through prompt corrective action and if necessary resolving them if their net worth falls to zero, at little or no cost to the taxpayer can be applied in the institutional framework of transition and emerging economies. Key words: insolvency, banks, transition, emerging economies JEL classification numbers: K23, G21, O16, G28, E53