Browsing by Subject "reaktiofunktiot"

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  • Koskela, Erkki; Virén, Matti (1990)
    Bank of Finland Research Discussion Papers 11/1990
    Keeping the finding of Feldstein and Horioka (1980) - that countries investment rates are highly correlated with their national saving rates - as a starting point this paper examines the possibility that . monetary policy reactions to target the current account mi.ght explain saving-investment correlations. The OLS, robust and variable-parameter estimates of the linear reaction functions with quarterly data from Germany, Italy, Japan and the United States suggest - the United States being an exception - that the current account deficit leads to tighter money, ceteris paribus. The threshold estimation results indicate, howeyer, that the reaction functions are non-linear in terms of the current account variable; monetary policy reacts stronger to deficits than to surpluses. Moreover, allowing for asymmetricity makes the performance of the reaction functions better and parameter estimates more preci se. We are tempted to i nterpret ·fi-ndi ngs as gi vi ng considerable support for the notion that current account has been a significant target for monetary policy in Germany, Italy and Japan. This in turn might explain the high saving-investment correlations even in the presence of highly mobile international capital movements.
  • Haavio, Markus; Jalasjoki, Pirkka; Kilponen, Juha; Paloviita, Maritta (2021)
    International Journal of Central Banking 2 (June)
    Published also in BoF DP 29/2017
    Using unique real-time quarterly macroeconomic projections of the Eurosystem/ECB staff, we estimate competing specifications of the ECB's monetary policy reaction function. We consider specifications which include inflation and output growth projections, a past inflation gap, a time-varying natural real interest rate, and different inflation targets. Our first key finding is that the de facto inflation target of the ECB lies between 1.6 percent and 1.8 percent. Our second key finding is that the ECB reacts both to short-term macroeconomic projections and to past deviations of inflation from its de facto target.
  • Paloviita, Maritta; Haavio, Markus; Jalasjoki, Pirkka; Kilponen, Juha (2017)
    Bank of Finland Research Discussion Papers 29/2017
    Published in International Journal of Central Banking 2021 ; 17 ; 2 ; June
    We estimate the ECB’s monetary policy reaction function by using real time Eurosystem/ECB staff macroeconomic projection data, which are presented to the ECB’s Governing Council when it assesses the monetary policy stance in the euro area. Alternative specifications of the reaction function account for a possible credibility loss due to persistent deviations of past inflation from the ECB’s inflation target. The results provide support for two alternative interpretations of the definition of price stability. First, the ECB dislikes inflation rates above two percent more than rates below two percent. Second, the ECB policy responses to past inflation gaps are symmetric with respect to a target of 1.6 - 1.7 percent. The out-of-sample predictions of the reaction function based on the second interpretation of the definition of price stability track well an estimated shadow interest rate during the zero lower bound period.