Bank of Finland Research Discussion Papers (1988- )


Keskustelualoitesarjassa julkaistaan akateemisia tutkimuksia teemoista, jotka ovat keskeisiä Suomen Pankin strategisten tavoitteiden kannalta ja vastaavat painopistealuetta makrotalouden ja rahoitusmarkkinoiden vuorovaikutus ja vakaus. Tekijät ovat tutkimusyksikön tai muiden yksikköjen ekonomisteja tai vierailevia tutkijoita. Keskustelualoitteet ilmestyvät nykyään englanniksi. Vuosien 1989-1994 kaikkia keskustelualoitteita ei ole saatavilla elektronisina.

Uusimmat julkaisut

  • D’Acunto, Francesco; Hoang, Daniel; Paloviita, Maritta; Weber, Michael (2021)
    Bank of Finland Research Discussion Papers 12/2021
    Many consumers below the top of the distribution of a representative population by cognitive abilities barely react to monetary and fiscal policies that aim to stimulate consumption and borrowing, even when they are financially unconstrained and despite substantial debt capacity. Differences in income, formal education levels, economic expectations, and a large set of registry-based demographics do not explain these facts. Heterogeneous cognitive abilities thus act as human frictions in the transmission of economic policies that operate through the household sector and might imply redistribution from low- to high-cognitive ability agents. We conclude by discussing how our findings inform the microfoundation of behavioral macroeconomic theory.
  • Eusepi, Stefano; Gibbs, Chris; Preston, Bruce (2021)
    Bank of Finland Research Discussion Papers 11/2021
    We study zero interest-rate policy in response to a large negative demand shock when long-run expectations can fall over time. Because falling expectations make monetary policy less effective by raising real interest rates, the optimal forward guidance policy makes large front-loaded promises to stabilize expectations. Policy is too stimulatory in the event of transitory shocks, but provides insurance against persistent shocks. The optimal policy is well-approximated by a constant calendar-based forward guidance, independent of the shock’s realised persistence. The insurance property distinguishes our paper from other bounded rationality papers that solve the forward guidance puzzle and generates important quantitative differences.
  • Stanisławska, Ewa; Paloviita, Maritta (2021)
    Bank of Finland Research Discussion Papers 10/2021
    Using the ECB Consumer Expectations Survey, this paper investigates how consumers revise medium-term inflation expectations. We provide robust evidence of their adjustment to the current economic developments. In particular, consumers adjust medium-term inflation views in response to changes in short-term inflation expectations and, to a lesser degree, to changes in perceptions of current inflation. We find that the strong adverse Covid-19 pandemic shock contributed to an increase in consumer inflation expectations. We show that consumers who declare high trust in the ECB adjust their medium-term inflation expectations to a lesser degree than consumers with low trust. Our results increase understanding of expectations formation, which is an important issue for medium-term oriented monetary policy.
  • 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.
  • Martins, Manuel M. F.; Verona, Fabio (2021)
    Bank of Finland Research Discussion Papers 8/2021
    Policymakers and researchers see inflation characterized by cyclical fluctuations driven by changes in resource utilization and temporary shocks, around a trend influenced by inflation expectations. We study the in-sample inflation dynamics and forecast inflation out-of-sample by analyzing a New Keynesian Phillips Curve (NKPC) in the frequency domain. In-sample, while inflation expectations dominate medium-to-long-run cycles, energy prices dominate short cycles and business-to-medium cycles once expectations became anchored. While statistically significant, unemployment is not economically relevant for any cycle. Out-of-sample, forecasts from a low-frequency NKPC significantly outperform several benchmark models. The long-run component of unemployment is key for such remarkable forecasting performance.