Browsing by Subject "deflaatio"

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  • Suvanto, Antti (2014)
    Suomen Pankki. Blogi
    Julkaistu Kalevassa 19.9.2014http://www.kaleva.fi/mielipide/vieras/deflaatiomorko-nousi-otsikoihin/676124/ Puheet inflaatiopeikosta ovat väistyneet, ja otsikoihin on nostettu deflaatiomörkö. Deflaatiota eli yleisen hintatason laskua pidetään haitallisena sen takia, että kun ihmiset odottavat hintojen lähiaikoina laskevan, he siirtävät ostopäätöksensä tuonnemmaksi. Paavo Teittinen nosti Helsingin Sanomien verkkosivulla 12.
  • Mehrotra, Aaron (2006)
    BOFIT Discussion Papers 10/2006
    Published in International Advances in Economic Research, vol. 14(1), 2008, pages 36-47
    We examine money demand in the Chinese economy during a period characterized by significant disinflation and outright deflation, coupled with strong output growth.Our study establishes a stable money demand system for broad money M2.Inflation affects the adjustment of the system towards equilibrium, and shocks to broad money are found to lead to higher inflation in the context of an impulse response analysis.The results provide support for the PBoC's policy of specifying intermediate targets for money growth. Importantly, our results suggest that movements in the nominal effective exchange rate should be taken into account in a successful implementation of such a policy. Keywords: Money demand; Deflation; China JEL Classification: E31, E41
  • Mehrotra, Aaron (Edita Prima, 2006)
    Bank of Finland studies. E 34
    This thesis consists of four essays in empirical macroeconomics. The first three essays examine the conduct of monetary policy during a disinflationary and deflationary era, with the policy interest rates close to or at the zero bound.The questions of interest include the potency of the interest rate channel, the stability of broad money demand, and the possibility to use the exchange rate channel in order to affect economic activity and the price level.We use time series econometrics techniques, mainly vector autoregressions, focusing on Japan.While we find that basic relationships between the variables appear unaltered by deflation, a further stimulative impact is difficult to implement once the zero bound is hit.This can be due to political reasons, as in the case of introducing a tax on currency in order to bring about negative interest rates, or because the needed stimulus is very big, as in the case of yen depreciation to increase the price level.The last essay focuses on the fiscal policy aspects of the European Union's most recent enlargement.We examine whether the fiscal austerity required by the Maastricht criteria and the Stability and Growth Pact would be harmful for the socio-economic development of the new Member States.Introducing an indicator for socio-economic development and utilizing instrumental variables regressions, we find that fiscal retrenchment, including a lower level of public debt, would be advantageous for development.A policy implication is to maintain the Stability and Growth Pact or an equivalent intergovernmental fiscal rule to curb public spending and debt. Keywords: deflation, disinflation, zero lower bound, broadly defined liquidity, socio-economic development, Stability and Growth Pact, EU enlargement
  • Mehrotra, Aaron (2005)
    BOFIT Discussion Papers 17/2005
    Published in Journal of Comparative Economics, March 2007, Vol. 35, No 1, pp. 188-210
    We examine the role of the exchange and interest rate channels during recent deflation episodes in Japan, Hong Kong and China.We estimate open-economy structural vector autoregressive (SVAR) models for the three economies with different monetary regimes and varying degrees of openness.In both Japan and Hong Kong, shocks to the nominal effective exchange rate have a statistically significant impact on prices, with a notably stronger effect in Hong Kong.Our results provide evidence about the role of external influences in the deflation episodes of these economies, and could also be seen to weakly support suggestions to depreciate the currency in order to escape from a liquidity trap.The importance of the interest rate channel is also found to be high in Japan and Hong Kong.In China, where interest rates have not been an important monetary policy tool, neither exchange nor interest rate shocks significantly influence price developments. Keywords: Deflation, Zero lower bound, SVAR JEL Classification: E31, F41
  • Evans, George W.; Honkapohja, Seppo (2009)
    Bank of Finland Research Discussion Papers 24/2009
    We examine global economic dynamics under infinite-horizon learning in a New Keynesian model in which the interest-rate rule is subject to the zero lower bound. As in Evans, Guse and Honkapohja, European Economic Review (2008), we find that under normal monetary and fiscal policy the intended steady state is locally but not globally stable. Unstable deflationary paths can arise after large pessimistic shocks to expectations. For large expectation shocks that push interest rates to the zero lower bound, temporary increases in government spending can effectively insulate the economy from deflation traps
  • Evans, George W.; Honkapohja, Seppo; Mitra, Kaushik (2016)
    Bank of Finland Research Discussion Papers 25/2016
    Stagnation as the new norm and fiscal policy are examined in a New Keynesian model with adaptive learning determining expectations. We impose inflation and consumption lower bounds, which can be relevant when agents are pessimistic. The inflation target is locally stable under learning. Pessimistic initial expectations may sink the economy into steady-state stagnation with deflation. The deflation rate can be near zero for discount factors near one or if credit frictions are present. Following a severe pessimistic expectations shock a large temporary fiscal stimulus is needed to avoid or emerge from stagnation. A modest stimulus is sufficient if implemented early.
  • Kortela, Tomi (2015)
    Bank of Finland. Bulletin. Monetary policy and the global economy
    Euro area inflation has long been below the European Central Bank’s objective for price stability and has continued to slow in recent months. This has given rise to heightened concerns that the euro area could soon be facing a prolonged period of deflation, as recently in Japan. The case of the United States shows, however, that the Japanese experience can be avoided. The key would seem to be the anchoring of inflation expectations. In the euro area, new measures of monetary accommodation have contributed to reducing the risk of Japanese-style deflation.
  • Herrala, Niko; Parviainen, Seija (2014)
    Bank of Finland. Bulletin. Monetary policy and the global economy 1
    Japan's policy of actively stimulating the economy has been dubbed Abenomics, after Shinzo Abe, who was elected as prime minister a little over a year ago. The main objective of Abenomics is to bring Japan on to a permanent growth trajectory and leave behind the prolonged deflationary spiral. The Bank of Japan has set a 2% inflation target, which it supports with a monetary policy of zero interest rates and quantitative easing. Both recorded inflation and consumers' and market inflation expectations have firmed up in recent months. It is, however, unclear to what extent the current performance of the Japanese economy is a consequence of the policies pursued and whether the changes will be permanent.
  • Herrala, Niko; Parviainen, Seija (2014)
    Euro & talous. Rahapolitiikka ja kansainvälinen talous 1
    Japanin aktiivista elvytyspolitiikkaa kutsutaan runsas vuosi sitten pääministeriksi nimitetyn Shinzo Aben mukaan abenomicsiksi. Keskeisenä tavoitteena tässä politiikassa on saada Japani pysyvästi kasvu-uralle ja irti pitkään jatkuneesta hintojen laskukierteestä. Keskuspankki on asettanut 2 prosentin inflaatiotavoitteen, jota se tukee nollakorkopolitiikalla ja rahapolitiikan määrällisellä keventämisellä. Sekä toteutunut inflaatio että kuluttajien ja markkinoiden inflaatio-odotukset ovat viime kuukausina voimistuneet. Epäselvää kuitenkin on, kuinka paljon kehitys on seurausta harjoitetusta talouspolitiikasta ja ovatko muutokset pysyviä.
  • Benhabib, Jess; Evans, George W.; Honkapohja, Seppo (2012)
    Bank of Finland Research Discussion Papers 27/2012
    We examine global dynamics under infinite-horizon learning in New Keynesian models where the interest-rate rule is subject to the zero lower bound. As in Evans, Guse and Honkapohja (2008), the intended steady state is locally but not globally stable. Unstable deflationary paths emerge after large pessimistic shocks to expectations. For large expectation shocks that push interest rates to the zero bound, a temporary fiscal stimulus or a policy of fiscal austerity, appropriately tailored in magnitude and duration, will insulate the economy from deflation traps. However "fiscal switching rules" that automatically kick in without discretionary fine tuning can be equally effective. JEL Classification: E63, E52, E58. Keywords: Adaptive Learning, Monetary Policy, Fiscal Policy, Zero Interest Rate Lower Bound
  • Kortela, Tomi (2015)
    Euro & talous 1/2015
    Euroalueen inflaatio on jo pitkään ollut keskuspankin hintavakaustavoitetta vaimeampi ja hidastunut viime kuukausina edelleen. Tämä on lisännyt huolta, että euroalue voisi joutua samanlaiseen pitkäaikaiseen deflaatioon kuin Japani. Yhdysvaltain kokemukset kuitenkin osoittavat, että Japanissa koettu kehitys on mahdollista välttää. Keskeistä näyttää olevan inflaatio-odotusten ankkurointi. Uusilla rahapoliittisilla keventämistoimillaan euroalue on vähentänyt riskiä, että se joutuisi kokemaan samanlaisen deflaation kuin Japani.
  • Suvanto, Antti; Hukkinen, Juhana (2004)
    Suomen Pankin keskustelualoitteita 28/2004
    The paper investigates the relationship between relative price movements and changes in the aggregate price level using monthly data on Finland's Consumer Price Index and its components from the period covering the past eight and a half years.This was a period of very low inflation.The rate of growth in the aggregate price level was occasionally very close to zero.The paper shows that declining nominal prices were a rather common phenomenon during this period of low or no inflation.The declining prices cannot, however, be explained by lack of demand or any generalized deflationary tendencies.Hence, the downward rigidity of nominal prices has not prevented relative price adjustments under price stability.The paper develops a new method for looking at the composition of inflation and illustrating how relative price dynamics interact with changes in the aggregate price level.The correlation of relative price variability and aggregate inflation has been negligible, but the correlation between the skewness of price change distribution and aggregate inflation is high.This is in accordance with the predictions of the menu cost models.A significant proportion of the relative price changes appear to have been persistent, suggesting the dominance of productivity and other supply shocks.Key words: price level, inflation, deflation, prices, business cycles JEL classification numbers: E3, E31
  • Chen, Hongyi; Funke, Michael; Tsang, Andrew (2016)
    BOFIT Discussion Papers 11/2016
    ​Persistent producer price deflation in China and other Asian economies has become a genuine concern for policymakers. In June 2016, China’s producer prices were down 12.7 percent from their peak in 2011, following a 52-month stretch of consecutive negative producer price readings (March 2012 to June 2016). Given problems with overcapacity and heavy corporate debt burdens, the incessant decline in producer prices has eroded corporate profitability, dampened fixed in-vestment and depressed growth overall. This paper analyzes the determinants of producer price declines across eleven Asian economies, finding that the recent synchronous and protracted pro-ducer price deflation has been driven by weak production growth, low commodity prices, spill-over effects from China, and, to a lesser extent, exchange rate pass-through. With China at the heart of the region’s producer price deflation challenge, we consider the structural adjustments needed in China to cope with the decline and head off deflationary threats.