Browsing by Subject "joustot"

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  • Cheung, Yin-Wong; Chinn, Menzie D.; Qian, XingWang (2012)
    BOFIT Discussion Papers 14/2012
    Published in Journal of International Money and Finance, Volume 31, Issue 8, 2012, Pages 2127-2146
    We find that Chinese trade flows respond to economic activity and relative prices -- as represented by a trade weighted exchange rate -- but the relationships are not always precisely or robustly estimated. Chinese exports are generally well-behaved, rising with foreign GDP and decreasing as the Chinese renminbi (RMB) appreciates. However, the estimated income elasticity is sensitive to the treatment of time trends. Estimates of aggregate imports are more problematic. In many cases, Chinese aggregate imports actually rise in response to a RMB depreciation and decline with Chinese GDP. This is true even after accounting for the fact a substantial share of imports are subsequently incorporated into Chinese exports. We find that some of these counter-intuitive results are mitigated when we disaggregate the trade flows by customs type, commodity type, and the type of firm undertaking the transactions. However, for imports, we only obtain more reasonable estimates of elasticities when we allow for different import intensities for different components of aggregate demand (specifically, consumption versus investment), or when we include a relative productivity variable. Keywords: China, imports, exports, real exchange rate JEL: F14, F41
  • Kilponen, Juha; Vilmunen, Jouko; Vähämaa, Oskari (2013)
    Bank of Finland Research Discussion Papers 9/2013
    Cancellation of income and substitution effect implied by King-Plosser-Rebelo (1988) preferences breaks tight coefficient restriction between the slope of the Phillips curve and the elasticity of consumption with respect to real interest rate in a sticky price macro model. This facilitates the estimation of intertemporal elasticity of substitution using full information Bayesian Maximum Likelihood techniques within a structural model. The US data from the period 1984 - 2007 supports low intertemporal elasticity of substitution and strongly rejects a logarithmic and an additively separable utility specification commonly applied in the New Keynesian literature. Keywords: Monetary policy, Bayesian estimation, Non-separable utility. JEL: E32, E52, E21
  • Bussiére, Matthieu; Peltonen, Tuomas (2008)
    BOFIT Discussion Papers 25/2008
    Published with third author Delle Chiaie, S. in IMF Economic Review, Volume 62, Issue 1, April 2014, Pages 146-178
    This paper estimates export and import price equations for 41 countries -including 28 emerging market economies. Further, it relates the estimated elasticities to structural fac-tors and tests for statistical breaks in the relation between trade prices and exchange rates. Results indicate that (i) the elasticity of trade prices in emerging markets is sizeable, but not significantly higher than in advanced economies; (ii) such elasticity is primarily influ-enced by macroeconomic factors such as the exchange rate regime and the inflationary en-vironment, although microeconomic factors such as product differentiation also play a role; (iii) export and import price elasticities tend to be strongly correlated across countries; (iv) pass-through to import prices has declined in some advanced economies, noticeably the United States; this is consistent with a rise in pricing-to-market in several EMEs and espe-cially with a change in the geographical composition of U.S. imports. Keywords: emerging market economies, exchange rate pass-through, pricing-to-market, local and producer currency pricing, exchange rate regime. JEL classification: F10, F30, F41.
  • Åkerholm, Johnny (1988)
    Bank of Finland Research Discussion Papers 6/1988
    The paper deals with the adjustment problems that small open economies face in a financially integrated world. Particular attention is paid to the assignment of different policy instruments te the achievement different policy targets. It is concluded that the· possibilities to use monetary and fiscal policy instruments are highly dependent on the flexibility of wages and prices. It is, however, likely that monetary policy has to be increasingly geared towards the containment of inflation, while fiscal pol~cy has to secure external balance. The pessibilities to maintain employment is thus largely dependent on wage and price behaviour. The adjustment process of Australia, Denmark and Sweden is analyzed in order to shed some light on the role of the policy mix and to evaluate the importance of wage and price flexibility and the factors which influence the degree of flexibility.
  • Seidel, Tobias (2008)
    Suomen Pankki. BoF online 2008/2
    1 Introduction 3 2 The standard argument 4 2.1 Flexible labour markets 5 2.2 Rigid labour markets 7 2.3 Trade 10 3 Offshoring 10 4 New trade theory and agglomeration economies 11 5 Conclusions 12
  • 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
  • Starck, Christian (1990)
    Bank of Finland Research Discussion Papers 28/1990
    The aim of this note is to examine whether the empirically documented positive interest rate elasticity of aggregate consumption in Finland is an artefact due to the previously widespread credit rationing. The aim is carried out using a novel time varying parameter approach and data from the period 1960 - 1989. The empirical evidence lends further support for a positive interest rate elasticity of aggregate consumption. The elasticity seems to have increased over time, especially in recent years. To some extent, this mirrors a gradual easening up of credit rationing, which has been particularly rapid in recent years.
  • Aurikko, Esko (1988)
    Bank of Finland Research Discussion Papers 1/1988
    Tässä tutkimuksessa tarkastellaan sekä teoreettisesti että empiirisesti koron ja/tai valuuttakurssin jouston suotavuutta talouden eristämiseksi erilaisilta häiriöiltä. Kurssisopeutumisen tarve riippuu ratkaisevasti eräistä talouden keskeisistä rakennepiirteistä sekä häiriöiden luonteesta. BOF4-mallilla tehtyjen simulointien mukaan millään politiikkayhdistelmäll,ä ei voida täydellisesti eristää kotimaista hintatasoa tai tuotantoa. optimaalisen politiikan valinta riippuu siten häiriöstä ja aikavälistä.
  • Rantala, Anssi (2003)
    Suomen Pankin keskustelualoitteita 11/2003
    Sufficiently flexible labour markets are considered an important precondition for countries to benefit from membership in the monetary union.Economic policy coordination within the European Community is extensive and includes issues related to labour market structures.In this paper we study the determination of flexibility of the labour market and, ultimately, of wages in a member country of the monetary union.As a starting point, the analysis assumes that each country's government, in formulating its labour market policy, decides the degree of nominal wage flexibility in light of the fact that this involves political costs that increase with the degree of wage flexibility.The study then focuses on the effects of monetary union membership on each country's prospects for coordination of economic policies - specifically labour market policies.The study shows that coordination of labour market policies contributes to greater nominal wage flexibility in member countries.However, coordination of labour market policies will be effective only if unemployment is persistent or under discretionary monetary policy.From the perspective of macroeconomic stability, there is no particular need for coordinating labour market policies among member countries if the common central bank can credibly precommit to a low inflation target or if fluctuations in unemployment are white noise.Key words: wage flexibility, economic policy coordination, credibility, precommitment JEL classification numbers: E52, E58, E61, J51
  • Castrén, Olli; Takalo, Tuomas; Wood, Geoffrey (2004)
    Suomen Pankin keskustelualoitteita 22/2004
    Published in Scottish Journal of Political Economy, Volume 57, No. 1, February 2010: 85-102
    It is commonly thought that an open economy can accommodate output shocks through either exchange rate or real sector adjustments.We formalise this notion by incorporating labour market rigidities into an 'escape clause' model of currency crises.We show that the absence of structural reform makes a currency peg more fragile and undermines the credibility of the monetary authority in a dynamic setting.The fragility is captured by a devaluation premium in expectations that increases the average inflation rate when the currency peg is more vulnerable to 'busts' than 'booms'.This interaction between macroeconomic and microeconomic rigidities suggests that a policy reform can only be consistent if it renders either exchange rates or labour markets flexible. Key words: exchange rate policy, labour market flexibility, structural reform JEL classification numbers: E42, F33, D84
  • Kilponen, Juha (2016)
    Euro & talous. Blogi
    Suomen talous on kohdannut viime vuosien aikana useita sokkeja. Miksi talouden taantuma on kestänyt näin pitkään? Selitystä Suomen huonolle sopeutumiskyvylle täytyy hakea kotimaan talouden rakenteista ja instituutioista.
  • Kilponen, Juha; Vilmunen, Jouko; Vähämaa, Oskari (2021)
    Bank of Finland Research Discussion Papers 9/2021
    Macroeconomic models typically assume additively separable preferences where consumption enters the utility function in a logarithmic form. This restriction implies that consumption growth is highly sensitive to movements in real interest rates, which in turn implies an unrealistically steep demand curve and intertemporal trade-off. We re-estimate the stylized New Keynesian Model with US data using King-Plosser-Rebelo (1988) preferences with and without habits and show that the equilibrium real interest rate elasticity of output is in the range of 0.05 − 0.20 in the US. Such low real interest rate elasticity is better in line with the empirical consumption Euler equation literature and implies relatively weak transmission of monetary policy to output and inflation.
  • Ellison, Martin (2001)
    Suomen Pankin keskustelualoitteita 4/2001
    This paper investigates the consequences of introducing endogenous price stickiness into a standard monetary policy model.We find that the modification reduces the optimal degree of inflation stabilization to which the central bank should commit.The reason is that less inflation stabilization encourages firms to review their prices more frequently.The economy becomes more flexible and the Phillips-curve tradeoff is improved, making it easier for the central bank to control inflation.This reduces, and may even reverse, the stabilization bias that is present in models with exogenous price stickiness and that recommends that the central bank generally commit to tighter stabilization of inflation than it would in a discretionary policy regime.Key words: price stickiness, monetary policy, stabilization bias
  • Ho, Chun-Yu (2014)
    BOFIT Discussion Papers 9/2014
    Published in International Economic Review, Volume 56, Issue 3, 1 August 2015: 723-749
    This paper develops and estimates a dynamic model of consumer demand for deposits in which banks provide differentiated products and product characteristics that evolve over time. Existing consumers are forward-looking and incur a fixed cost for switching banks, whereas incoming consumers are forward-looking but do not incur any cost for joining a bank. The main finding is that consumers prefer banks with more employees and branches. The switching cost is approximately 0.8% of the deposit's value, which leads the static model to bias the demand estimates. The dynamic model shows that the price elasticity over a long time horizon is substantially larger than the same elasticity over a short time horizon. Counterfactual experiments with a dynamic monopoly show that reducing the switching cost has a comparable competitive effect on bank pricing as a result of reducing the dominant position of the monopoly. Keywords: banks in China, demand estimation, switching cost. JEL classifications: G21, L10
  • Suomen Pankki (1965)
    Suomen Pankin taloustieteellisen tutkimuslaitoksen julkaisuja. Sarja A 28
    Rahasäästäminen inflaatio-olosuhteissa, ekonomi Kari Puumanen 7 Suomen ja Ruotsin vientituotteiden kysynnän substituutiojoustoista, kauppat. kand. Jouko Sivander 18 Kokonaistaloudellisia laskelmia palkkaneuvotteluja varten, valtiot. tri Timo Helelä, valtiot. maist. Paavo Grönlund, valtiot. kand. Ahti Molander 30 Liite Luottovolyymi vuonna 1964 71 Liite Luottomarkkinatilastoa vuodelta 1964 83 Liite Maksuvälinevarantotase vuosina 1964-1965 89.
  • Pesonen, Hanna (1998)
    Suomen Pankin kansantalouden osaston työpapereita; Bank of Finland. Economics department working papers 6/98
  • Takala, Kari (1995)
    Suomen Pankin keskustelualoitteita 11/1995
    Monetary policy affects the economy through the exchange rate and interest rates.It is assumed that the relationship between interest rates and GDP is negative and that interest rates affect GDP more powerfully than the other way around.These conclusions are confirmed here.Estimated elasticities--which compare annual percentage changes in GDP to annual percentage changes in the interest rate-produce interest rate elasticity close to unity.It should also be stressed that a nominal interest rate effect is found instead of a real rate effect both in GDP and its components. For private consumption, the interest rate measures the relative future price of consumption, which includes substitution and income effects.According to estimations the interest rate elasticity for non-durable consumption is around -0.4, which indicates the dominance of the substitution effect. For durable purchases, the interest rate elasticity is much higher and is also volatile.Rough estimate showed that the interest rate elasticity for durables could be around -4.0. For private investment, the interest rate measures the opportunity cost of investment and a cost factor in debt financing.Financial deregulation has obscured the importance of interest rates in determining manufacturing investment.It seems that during the boom years domestic lending rates lost their significance in affecting investment plans.A rough estimate for a long-term interest rate elasticity of manufacturing investment could be -2.On the other hand financial deregulation has clearly increased the power of interest rates in determining the level of housing investment. During 1980s the real lending rate became a significant determinant of housing investment, and we cannot reject the hypothesis of unitary elasticity, ie. elasticity of -1.
  • Sivander, Jouko (1965)
    Suomen Pankki. D 11
    Tutkimuksen juoni ja eteneminen on lyhyesti kerrottuna seuraava- II luvussa johdetaan käsiteltävä substituutiojoustoparametri lähtemällä tavallisesta kysynnän hintajoustosta- Samalla konstruoidaan kysyntäfunktio, jossa tämä parametri esiintyy. III luvussa esitetään tämän kysyntäfunktion tulkintateoria tarkastelemalla sen soveltuvuutta ekonometrisesti testattavaksi malliksi.Tämä luku muodostaa tutkimuksen "teoreettisen" osan, jossa käsitellään etenkin suhteellisten hintojen vaikutusta ulkomaankaupan jakaantumiseen sekä niitä olettamuksia, joiden vallitessa hintamekanismin voidaan sanoa toimivan.Vaikka teoreettisella tarkastelulla onkin pääpaino, on huomiota kiinnitetty myös siihen, voidaanko muutoksia todella mitata. Varsinaisen "empiirisen" osan muodostaa IV luku, jossa tulevat esille käytetyt estimointimenetelmät ja niiden kritiikki.Tämä luku on koetettu tehdä mahdollisimman havainnolliseksi ja joustoparametri saa siinä aivan uutta valaistusta, kun lähtökohtana on olemassa oleva tilastoaineisto.IV luvussa käsitellään myös estimoinnissa esiintyviä virheitä ja tarkastellaan eri menetelmien soveltuvuutta virheiden minimoinnin kannalta.Empiiristen tulosten yhteydessä tarkastellaan vielä lyhyesti, mitä muita tekijöitä kuin hinta vaikuttaa kilpailevien maiden vienteihin eli sellaisia seikkoja, joiden valossa estimaatit vasta , saavat oikean sisällön. Koko tutkimus on oikeastaan malliesimerkki kansantaloustieteen mittaamisproblematiikasta, operationaalisen teorian kehittelystä ja empiirisistä mittaamisongelmista.
  • Benkovskis, Konstantins; Wörz, Julia (2013)
    BOFIT Discussion Papers 18/2013
    The paper proposes a theoretical framework to explain gains and losses in export market shares by their price and non-price determinants. Starting from a demand-side model à la Armington (1969), we relax several restrictive assumptions to evaluate the contribution of unobservable changes in taste and quality, taking into account differences in elasticities of substitution across product markets. Using highly disaggregated trade data from UN Com-trade, our empirical analysis for the major world exporters (G7 and BRIC countries) reveals the dominant role of non-price factors in explaining the competitive gains of BRIC countries and concurrent decline in the G7's share of world exports. JEL classification: C43, F12, F14, L15 Keywords: export market share decomposition, non-price competitiveness, real effective exchange rate