Browsing by Subject "valtionvelka"

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  • Kariluoto, Jarmo (1992)
    Suomen Pankin tilasto-osaston työpapereita; Bank of Finland statistics department working papers 11/1992
  • Bank of Finland (2017)
    Bank of Finland. Bulletin 5/2016
    Finland's fiscal situation is challenging. The general government deficit is still high, and public debt is on an upward trend. Attainment of more balanced public finances is hampered not only by high unemployment-related and other social security expenditure but also by rapid growth in age-related spending and low economic growth. Therefore, the problems with public finances cannot be explained by cyclical factors alone. Rather, there is a significant and long-term structural problem with Finland's public finances. The public debt problem makes the Finnish economy more vulnerable to global economic disruptions.
  • Haajanen, Jyrki; Pylkkönen, Pertti (2010)
    Bank of Finland. Financial market report 1
    CDS markets related to governments exposures have recently faced heavy criticism. Criticism of derivatives markets is understandable following the financial crisis, but demands for restrictions, or prohibitions, on trading in certain products require thorough analysis.
  • Haajanen, Jyrki; Pylkkönen, Pertti (2010)
    Suomen Pankki. Rahoitusmarkkinaraportti 1
    Valtion riskeihin kohdistuvat CDS-markkinat ovat joutuneet viime aikoina ankaran arvostelun kohteeksi. Kriittinen suhtautuminen johdannaismarkkinoihin on rahoituskriisin jälkeen ymmärrettävää, mutta vaatimukset joidenkin yksittäisten tuotteiden kaupankäynnin rajoittamisesta tai jopa kieltämisestä edellyttävät huolellista analysointia.
  • Nars, Kari; Saarinen, Pekka (1997)
    Bank of Finland. Bulletin 71 ; 2 ; February
  • Kaaresvirta, Juuso; Laakkonen, Helinä (2021)
    BOFIT Policy Brief 5/2021
    China became the world’s largest lender to emerging and developing economies over the past decade. At the same time, concerns on the debt sustainability of many of these countries have grown. Some countries have found themselves struggling to repay their loans and China has had to renegotiate debt restructurings bilaterally. As covid-19 pandemic hit many of the borrowers hard in 2020, China committed with all other G20 countries to the Debt Service Suspension Initiative (DSSI) to temporarily suspend official bilateral debt payment of 73 beneficiary countries. While China’s overseas lending remain opaque, there is little evidence that China intentionally practices “debt-trap diplomacy.”
  • Sutela, Pekka (2002)
    BOFIT Online 8/2002
    Contrary to most experience, Estonia (as well as Latvia and Lithuania) has been able to combine, for a number of years, fixed exchange rates, financial liberalisation (prior to proper supervision) and large current account deficits without inviting speculation using large capital flows as vehicles.The standard argument is that this must be due to exceptionally sound fundamentals and great policy credibility.Without challenging this argument either generally or for the case of Estonia, Latvia and Lithuania, this paper offers a supplementary perspective.These countries did not aim at developing a full-scale national economy with a full set of financial and other markets, as they had the possibility of joining an institutionally, culturally and geographically close set of North-Western European markets.Such a strategy goes further than having the goal of "rejoining Europe" as the external policy anchor.Having well-developed domestic markets can in some cases be substituted by accessing near-by markets, thus leaving little leeway to potentially unstable capital flows.This option, however, is not open to all, and it also has its downside. Key words: capital flows, exchange rate systems, institutional development, financial liberalisation, Baltic countries
  • Saukkonen, Erja (1995)
    Suomen Pankin keskustelualoitteita 30/1995
    This paper is a study of default risk on Finnish government debt. The objectives of the study are to estimate the size of the default risk and to shed some light to the causes of default risk, using simple regression runs.To estimate the Finnish government default risk premium, we measured the interest rate differential on Finnish government DEM- and USD-denominated bonds compared to respectively German and US government bonds over the period October 1991 February 1995.For the sake of comparison, we also measured the interest rate differential between Finnish government FIM-denominated bonds and German government bonds.Our results indicate that for the period studied the default risk premium on the Finnish government foreign-currency denominated debt was quite small, but by no means trivial and clearly not constant.The default risk premium on DEM-denominated debt was a small fraction of the differential for FIM-denominated debt.Our results provide strong evidence that the default risk premium was mainly determined by the level and growth rate of government debt and was not related to the general economic indicators (GDP and current account).
  • Marzo, Massimiliano; Zagaglia, Paolo (2008)
    Bank of Finland Research Discussion Papers 24/2008
    Canzoneri and Diba (2004) show that the Taylor principle is not a panacea for equilibrium determinacy in a model where bonds and money provide liquidity services to households. We consider a cashless New Keynesian model with two types of government bonds. One bond provides transaction services, whereas the other is used only as a store of value. We show that the Taylor principle is still sacrosanct, and that the results of Leeper (1991) are confirmed. Keywords: monetary policy, fiscal policy, government bonds, determinacy JEL classification numbers: E52, C68
  • Evans, George W.; Honkapohja, Seppo; Kaushik, Mitra (2010)
    Bank of Finland Research Discussion Papers 13/2010
    Published in Journal of Money, Credit and Banking, 44. 7 (Oct 2012): 1259-1283
    This paper shows that the Ricardian Equivalence proposition can continue to hold when expectations are not rational and are instead formed using adaptive learning rules. In temporary equilibrium, with given expectations, Ricardian Equivalence holds under the standard conditions for its validity under rational expectations. Furthermore, Ricardian Equivalence holds for paths of temporary equilibria under learning provided suitable additional conditions on learning dynamics are satisfied. New cases of failure of the Ricardian proposition emerge under learning. Most importantly, agents expectations must not depend on government financial variables under deficit financing.
  • Saka, Orkun (2019)
    Bank of Finland Research Discussion Papers 3/2019
    European banks have been criticized for holding excessive domestic government debt during economic downturns, which may have intensified the diabolic loop between sovereign and bank credit risks. By using a novel bank-level dataset covering the entire timeline of the Eurozone crisis, I first re-confirm that the crisis led to the reallocation of sovereign debt from foreign to domestic banks. This reallocation was only visible for banks as opposed to other domestic private agents and it cannot be explained by the banks' risk-shifting tendency. In contrast to the recent literature focusing only on sovereign debt, I show that banks' private sector exposures were (at least) equally affected by a rise in home bias. Finally, consistent with these patterns, I propose a new debt reallocation channel based on informational frictions and show that informationally closer foreign banks increase their relative exposures when sovereign risk rises. The effect of informational closeness is economically meaningful and robust to the use of different information measures and controls for alternative channels of sovereign debt reallocation.
  • Pohjola, Tapio (2002)
    Suomen Pankin keskustelualoitteita; Bank of Finland. Discussion papers 14/2002
    This paper deals with the interaction of fiscal and monetary policy when the central bank is pursuing a price stability-oriented monetary policy.In particular, we study the durability of the price stability regime when public debt accumulates as a result of ultimately unsustainable deficits.The growth of indebtedness causes the collapse of the price stability regime after a period of rising deficits.The budget deficit is endogenously determined in the model, as a result of government's decisions on how to finance its expenditure.The alternative methods of finance are taxes, debt, and seigniorage.Under the price stability regime, only the first two methods are available, but in the long run taxes and seigniorage are the only alternatives.The price stability regime collapses when the public debt reaches an edogenously determined threshold, which makes reneging on price stability as attractive as accumulating more tax burden for the future.We are able to solve for the critical level of debt, the timing of the collapse, and the reaction of taxes to the collapse of the price stability regime. The critical level of debt depends, inter alia, on the level of government consumption, the real interest rate, the velocity of money, and the efficiency-effects of taxation.The results are illustrated by several numerical simulations. Key words: inflation, fiscal policy, fiscal theory of inflation, Stability and Growth Pact
  • Sarlin, Peter; Ramsay, Bruce A. (2014)
    Bank of Finland Research Discussion Papers 11/2014
    This paper operationalizes early theoretical contributions of Hyman Minsky and applies these in the context of economic sectors and nations. Following the view of boom-bust asset cycles, depicted by the endogenous build-up of risks and their abrupt unraveling, Minsky highlighted the relationship between debt obligations and cash flows. While leverage is oftentimes linked to the vulnerability of a nation, and hence systemic risk, one less explored measure of leverage is the debt-to-cash flow ratio (Debt/CF). Cash flows certainly have a well-known, academically verified connection to the ability of corporations to service and repay corporate debt. This paper investigates whether the relationship between the flow of a nation's savings to its stock of total debt provides a means for understanding systemic risks. For a panel of 33 nations, we explore historic Debt/CF trends, as well as apply the same procedure to individual economic sectors. This assessment of systemic risk is arranged for presentation within a four-zone framework. In terms of an early-warning indicator, we show that the Debt/CF ratio e effectively stratifies systemic risks, and offers a useful platform toward macro-financial sustainability. Keywords: debt-to-cash flow, debt-to-gross saving, systemic risk, four-zone framework JEL codes: E210, F340, G010, H630
  • Komulainen, Tuomas (2004)
    Suomen Pankki. E 29
    The financial crises in emerging markets in 1997-1999 were preceded by financial liberalisation, rapid surges in capital inflows, increased levels of indebtedness, and then sudden capital outflows. The study contains four essays that extend the different generations of crisis literature and analyse the role of capital movements and borrowing in the recent crises. Essay 1 extends the first generation models of currency crises.It analyses bond financing of fiscal deficits in domestic and foreign currency, and compares the timing and magnitude of attack with the basic case where deficits are monetised.The essay finds that bond financing may not delay the crisis.But if the country's indebtedness is low, the crisis is delayed by bond financing, especially if the borrowing is carried out with bonds denominated in foreign currency. Essay 2 extends the second generation model of currency crises by adding capital flows.If these depend negatively on crisis probability, there will be multiple equilibria.The range of country fundamentals for which self-fulfilling crises are possible is wider when capital flows are included, and thus more countries may end up in crisis.An application of the model shows that in 1996 in many emerging economies the fundamentals were inside the range of multiple equilibria and hence self-fulfilling crises were possible. Essay 3 studies financial contagion and develops a model of the international financial system.It uses a basic model of financial intermediation, but adds several local banks and an international bank.These banks are able to use outside borrowing, the amount of which is determined by the value of their collateral.The essay finds that the use of leverage by local and global banks and the fall in collateral prices comprise an important channel and reason for contagion. Essay 4 analyses the causes of financial crises in 31 emerging market countries in 1980.2001.A probit model is estimated using 23 macroeconomic and financial sector indicators.The essay finds that traditional variables (eg unemployment and inflation) and several indicators of indebtedness (eg private sector liabilities and banks. foreign liabilities) explain currency crises.When the sample was divided into pre- and post-liberalisation periods, the indicators of indebtedness became more important in predicting crisis in the post-liberalisation period. Key words: currency crises, banking crises, emerging markets, borrowing, collateral, contagion, liberalisation
  • Pylkkönen, Pertti; Savolainen, Eero (2012)
    Bank of Finland. Financial market report 1
    European banks and governments have a substantial amount of long-term debt funding maturing in 2012. The ECB's liquidity injection provided a financing opportunity for banks in January.
  • Hasko, Harri (2003)
    EURO & TALOUS 1
    Viime vuosien heikko talouskehitys on kääntänyt euroalueen maiden julkisen talouden alijäämän jälleen kasvuun.Etenkin ne maat, jotka eivät hyvinä vuosina saattaneet julkista talouttaan vakaus- ja kasvusopimuksen edellyttämälle kestävälle kehitysuralle, ovat nyt hankalan tehtävän edessä, kun ne joutuvat supistamaan vajeitaan - sopimuksen sanktioiden laukeamisen uhalla - kangertelevan talouskasvun ja synkkien tulevaisuuden näkymien keskellä.
  • Pylkkönen, Pertti; Savolainen, Eero (2012)
    Suomen Pankki. Rahoitusmarkkinaraportti 1
    Euroalueen pankeilla ja valtioilla on erääntymässä runsaasti pitkäaikaista velkarahoitusta vuonna 2012. Pankeille avautui tammikuussa mahdollisuus saada rahoitusta EKP:n likviditeettiruiskeen ansiosta.
  • Kiviniemi, Arttu (2019)
    Valtiovastuut muodostavat merkittävän riskikeskittymän euroalueen pankeissa ..2 Vakavaraisuussääntely sivuuttaa monelta osin valtiolainoihin liittyvät riskit ..4 Valtiovastuiden vakavaraisuuskäsittelyä koskevat muutosehdotukset ..6 Valtiovastuiden keskittyneisyyteen perustuvien riskipainolisien vakavaraisuusvaikutus jäisi todennäköisesti maltilliseksi ..9 Yhteenveto ..11
  • Ikonen, Pasi (2017)
    Bank of Finland. Scientific monographs. E 51
    This thesis applies several econometric methods to a selection of country panels to study how growth is influenced by financial development and government debt. The first part presents the thesis discussion, including a synthesis on financial development, government debt, money supply, and economic growth. The second part deepens the discussion with three stand-alone essays. The first essay models how financial development affects growth through utilization of technological innovation. Based on explicit modeling of the innovation channel of finance, the results show a significant and positive sign for the interaction term between the measure of a country’s own innovation and financial development in the most important specifications. This suggests that the innovation channel of finance is likely to be positively relevant to growth. The second essay examines effects of venture capital investment on economic growth in a similar framework. The findings demonstrate that the interaction of venture capital with innovation has a positive and statistically significant coefficient. Further, the joint impact related to venture capital and its interactions is positive in most specifications, suggesting that venture capital is probably a relevant factor for growth. The third essay delves deeply in the effects of general government debt and general government external debt on growth of real GDP. It explores the long-standing endogeneity problem, includes other relevant debt concepts besides government total debt, revisits the issue whether there are threshold values for the government debt ratio, examines the effect of debt on GDP components and structure, uses timely and extensive datasets and extensive robustness analysis, and runs meta-regressions of the results of this and a many of other studies. Even with correction for endogeneity, the study finds modest evidence of a negative and significant growth impact for government debt. The evidence is not robust over all samples and specifications. The final essay also reports evidence of a negative and significant effect of government external debt in the sample of developed economies. The findings overall comport with those of recent papers that conclude that there is no universal threshold value for a government debt ratio that would hold across all countries. Further, government debt appears to decrease the private-investment-to-GDP ratio, but increases the GDP ratio for household consumption. The meta-regression analysis shows that the study’s results on how specification features affect the estimate of the government debt coefficient are broadly in line with those of other studies.
  • Freystätter, Hanna; Mattila, Veli-Matti (2011)
    Suomen Pankki. BoF online 1/2011
    Kansainvälisten rahoitusmarkkinoiden häiriötila kärjistyi syksyllä 2008 finanssikriisiksi, jonka vaikutukset levisivät nopeasti eri puolille maailmantaloutta. Kriisi vei Suomenkin talouden syvään taantumaan. Tässä selvityksessä tarkastellaan kriisin välittymistä ja vaikutuksia Suomen talouteen sekä arvioidaan sitä, millä tavoin kriisi on voinut muuttaa maamme pidemmän aikavälin kasvunäkymiä. Selvitys perustuu Suomen Pankissa vuosina 2009 2010 tehtyyn analyysiin. Lisäksi on hyödynnetty jonkin verran muiden tahojen tuottamaa materiaalia. Koska tämän selvityksen julkistamisen aikana kriisi yhä osin jatkuu julkistalouksien velkakriisin muodossa, selvityksessä esitetyt arviot ovat luonteeltaan alustavia