Recent Submissions

  • Funke, Michael; Zhong, Doudou (2020)
    BOFIT Discussion Papers 19/2020
    The political hyperglobalisation trilemma asserts that a government cannot simultaneously opt for deep international integration, national sovereignty and democratic politics, but rather is constrained to choosing two of the three at most. This paper presents a new and comprehensive cross-country panel dataset operationalising the multifaceted three vertices of the trilemma. After an explorative data analysis, we employ panel error-correction techniques to uncover the mutual interdependencies among the variables in the system. The econometric evidence supports the existence of a long‐run relationship between economic integration, national sovereignty and democratic politics as postulated in the political globalisation trilemma.
  • Wang, Hao; Fidrmuc, Jan; Luo, Qi (2020)
    BOFIT Discussion Papers 18/2020
    Grandparenting duties can affect the well-being of the elderly both positively and negatively. This paper disentangles the interactions between grandparenting, quality of life, and life satisfaction in China. Using a panel dataset of 3,205 respondents in three waves of the China Health and Retirement Longitudinal Study (CHARLS) in 2011, 2013, and 2015, we find that grandparents who look after grandchildren are less at risk of depression, receive more financial and in-kind transfers from their children, and report greater life satisfaction than grandparents who do not look after grandchildren. These benefits vary across gender and rural-urban status, however. The positive effect of grandparenting is driven mainly by the direct effect with negligible mediating effect attributable to better quality of life.
  • König-Kersting, Christian; Trautmann, Stefan T.; Vlahu, Razvan (2020)
    Bank of Finland Research Discussion Papers 14/2020
    We study the impact of disclosure about bank fundamentals on depositors’ behavior in the presence (and absence) of economic linkages between financial institutions. Using a controlled laboratory environment, we identify under which conditions disclosure is conducive to bank stability. We find that bank deposits are sensitive to perceived bank performance. While banks with strong fundamentals benefit from more precise disclosure, an opposing effect is present for solvent banks with weaker fundamentals. Depositors take information about economic linkages into account and correctly identify when disclosure about one institution conveys meaningful information for others. Our findings highlight both the costs and benefits of bank transparency and suggest that disclosure is not always stability enhancing.
  • Angelini, Giovanni; Caggiano, Giovanni; Castelnuovo, Efrem; Fanelli, Luca (2020)
    Bank of Finland Research Discussion Papers 13/2020
    How large are government spending and tax multipliers? The fiscal proxy-SVAR literature provides heterogeneous estimates, depending on which proxies - fiscal or non-fiscal - are used to identify fiscal shocks. We reconcile the existing estimates via flexible vector autoregressive model that allows to achieve identification in presence of a number of structural shocks larger than that of the available instruments. Our two main findings are the following. First, the estimate of the tax multiplier is sensitive to the assumption of orthogonality between total factor productivity (non-fiscal proxy) and tax shocks. If this correlation is assumed to be zero, the tax multiplier is found to be around one. If such correlation is nonzero, as supported by our empirical evidence, we find a tax multiplier three times as large. Second, we find the spending multiplier to be robustly larger than one across different models that feature different sets of instruments. Our results are robust to the joint employment of different fiscal and non-fiscal instruments.
  • Paloviita, Maritta; Haavio, Markus; Jalasjoki, Pirkka; Kilponen, Juha; Vänni, Ilona (2020)
    Bank of Finland Research Discussion Papers 12/2020
    We measure the tone (sentiment) of the ECB’s Governing Council regarding economic outlook at the time of each monetary policy meeting and use this information together with the Eurosystem/ECB staff macroeconomic projections to directly estimate the Governing Council’s loss function. Our results support earlier, more indirect findings, based on reaction function estimations, that the ECB has been either more averse to inflation above 2% ceiling or that the de facto inflation aim has been considerably below 2%. Our results suggest further that an inflation aim of 2% combined with asymmetry is a plausible specification of the ECB’s preferences.