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  • Kajanoja, Lauri (2001)
    Tämä väitöskirja sisältää empiirisiä tutkimuksia valuuttakriisien syistä ja mekaniikasta. Lisäksi tarkastellaan valuuttakurssijärjestelmien muutoksiin kohdistuvien odotusten mittaamista. Tutkimukset esitetään kolmena itsenäisenä osana luvuissa 2, 3 ja 4. Luku 1 on lyhyt kirjallisuuskatsaus. Luvun 2 tutkimus käsittelee valuuttakriisejä Suomessa. Tutkimuksessa sovelletaan empiirisesti spekulatiivisten hyökkäysten mallia. Empiiriseen menetelmään esitetään tässä tutkimuksessa sellaiset muunnokset, että kotimaisen hintatason ja rahan kysynnän dynaaminen määräytyminen on mallinnettu empiirisesti uskottavasti ja että valuuttamarkkinainterventiot ovat osin steriloituja. Luvussa 2 siten hylätään aiemmissa samankaltaisissa tutkimuksissa tehdyt oletukset interventioiden steriloimattomuudesta ja ostovoimapariteetin pätemisestä jokaisella ajanhetkellä. Tämän menetelmän lisäksi valuuttakriisejä tutkitaan estimoimalla probit-malleja. Kumpikin empiirinen menetelmä tuottaa sellaisen tuloksen, että Suomen valuuttakriisit liittyivät osin kokonaistuotannon kasvun hidastumiseen ja työttömyysasteen nousuun. Valuuttakriisin todennäköisyyteen vaikuttavat myös keskuspankin kotimaisen luotonannon kasvu, reaalinen efektiivinen valuuttakurssi sekä kriisien tartuntavaikutukset muista Pohjoismaista. Tutkimukset, joissa valuuttakurssijärjestelmien muutoksiin kohdistuvia odotuksia mitataan rahoitusmarkkinahintojen avulla, ovat vaikuttaneet merkittävästi tieteelliseen keskusteluun valuuttakriiseistä. Luvussa 3 esitetään teoreettinen valuuttakriisimalli, jossa steriloiduilla valuuttamarkkinainterventioilla on portfoliotasapainovaikutuksia ja jossa politiikantekijä pyrkii vakauttamaan kotimaisen korkotason ja puolustamaan kiinnitettyä valuuttakurssia. Malli näyttää, miksi valuuttakurssin muutosodotukset eivät välttämättä täysin näy korkoeroissa. Se antaa aiheen suhtautua varovaisesti kattamattoman korkopariteetin olettamiseen valuuttakriisejä käsittelevissä empiirisissä tutkimuksissa. Lisäksi luvussa 3 esitetään uusia empiirisiä tutkimustuloksia koskien valuuttamarkkinainterventioiden portfoliotasapainovaikutuksia. Nämä vaikutukset näyttävät olleen melko suuria Suomen 1990-luvulla tapahtuneissa valuuttakriisissä, joissa kiinteää valuuttakurssia puolustettiin suurilla steriloiduilla valuuttamarkkinainterventioilla. Luvun 4 empiirinen tutkimus käsittelee useita eurooppalaisia kiinnitettyjä valuuttakursseja 1980-luvulla ja 1990-luvun alussa. Valuuttoihin kohdistuneita devalvaatio- ja revalvaatio-odotuksia selitetään regime switching -malleilla. Niitä verrataan vastaaviin lineaarisiin malleihin kerroinestimaattien mielekkyyden tarkastelun ja spesifikaatiotestien avulla. Regime switching ?mallit sopivat hyvin erityisesti Belgian, Ranskan ja Tanskan valuuttoja koskeville odotuksille. Tutkimuksen tulokset ovat siten sopusoinnussa sen kanssa, että näihin kolmeen valuuttakurssijärjestelmään kohdistuneet muutosodotukset olivat osittain itsensä toteuttavia. Kyseiset kiinnitetyt valuuttakurssit eivät vaikuta olleen ristiriidassa taloudellisten perustekijöiden kanssa, mutta niihin silti kohdistui ajoittain devalvaatiopaineita.
  • Kajanoja, Lauri (2001)
    This thesis presents empirical models that deal with identifying the determinants of currency crises and the mechanics of them. Also, issues related to the measurement of realignment expectations are studied. Three independent pieces of research are presented in Chapters 2 through 4. Chapter 1 contains a selective survey of the literature. Finnish currency crises are studied in Chapter 2, using an empirical speculative attack model. The approach is modified to allow for plausible dynamics of prices and money demand and for partial sterilization of interventions, thus abandoning the assumptions of short run PPP and zero sterilization. In addition, probit models are estimated to study the crises. Both methods suggest that the crises were related to slowing economic growth and rising unemployment. The probability of a crisis is also affected by domestic credit growth, the real effective exchange rate, and contagion from the other Nordic countries. Empirical studies that extract realignment expectations from prices of financial assets have played an important role in shaping understanding of recent currency crises. In Chapter 3, a model of currency crises is presented where sterilized interventions have portfolio balance effects and the policymaker tries to stabilize interest rates. The model shows why changes in exchange rate expectations may not fully show in interest rate differentials, thus suggesting caution in assuming UIP in empirical work on currency crises. In addition, new empirical evidence on portfolio balance effects is presented, suggesting they were substantial during a recent currency crisis where large sterilize interventions took place. In Chapter 4, regime switching models are employed to study the ability of economic fundamentals to explain realignment expectations concerning a number of European currency pegs in the late 1980s and early 1990s. Regime switching models with constant transition probabilities are compared with linear models, judging by the plausibility of coefficient estimates and by specification tests. The regime switching models fit relatively well for the Belgian, French, and Danish currencies. The evidence is thus consistent with particular kind of selffulfilling features in the realignment expectations, since these three pegs do not seem to have been fundamentally misaligned but still came under pressure.
  • Riihimäki, Elisa (Helsingin yliopisto, 2009)
    This dissertation consists of an introductory section and three essays investigating the effects of economic integration on labour demand by using theoretical models and by empirical analysis. The essays adopt an intra-industry trade approach to specify a theoretical framework of estimation for determining the effects of economic integration on employment. In all the essays the empirical aim is to explore the labour demand consequences of European integration. The first essay analyzes how labour-demand elasticities with own price have changed during the process of economic integration. As a theoretical result, intensified trade competition increases labour-demand elasticity, whereas better advantage of economies of scale decreases labour-demand elasticity by decreasing the elasticity of substitution between differentiated products. Furthermore, if integration gives rise to an increase in input-substitutability and/or outsourcing activities, labour demand will become more elastic. Using data from the manufacturing sector from 1975 to 2002, the empirical results provide support for the hypothesis that European integration has contributed to increased elasticities of total labour demand in Finland. The second essay analyzes how economic integration affects the impact of welfare poli-cies on employment. The essay considers the viability of financing the public sector, i.e. public consumption and social security expenses, by general labour taxation in an economy which has become more integrated into international product markets. The theoretical results of the second essay indicate that, as increased trade competition crowds out better economies of scale, it becomes more costly to maintain welfare systems financed by labour taxation. Using data from European countries for the years 1975 to 2004, the empirical results provide inconsistent evidence for the hypothesis that economic integration has contributed to the distortion effects of welfare policies on employment. The third essay analyzes the impact of profit sharing on employment as a way to introduce wage flexibility into the process of economic integration. The results of the essay suggest that, in theory, the effects of economic integration on the impact of profit sharing on employment clearly depend on a trade-off between intensified competition and better advantage of economies of scale. If product market competition increases, the ability of profit sharing to improve employment through economic integration increases with moderated wages. While, the economic integration associating with market power in turn decrease the possibilities of profit sharing with higher wages to improve employment. Using data from the manufacturing sector for the years 1996 to 2004, the empirical results show that profit-sharing has a positive impact on employment during the process of European integration, but can have ambiguous effects on the stability of employment in Finland.
  • Mälkönen, Ville (Helsingin yliopisto, 2004)
  • Lombardini-Riipinen Chiara (2002)
    In this dissertation we analyze the need and modes of regulation of a duopoly that is vertically differentiated in environmental quality. In the first essay, we study the impacts of an exogenous tax on emissions per unit of production when the market is partially covered and the cost of quality is quadratic in quality. We show that the emission tax increases the product's environmental quality, enhances competition, expands output, decreases aggregate emissions and increases social welfare. In the second essay, we characterize the first-best ad valorem tax/emission tax policy when the market is fully covered and the cost of quality is linear in quantity and quadratic in quality. The first-best policy that couples a uniform valorem tax and a subsidy to consumers who purchase the high environmental quality variant is also characterized and so are the second-best policies when only one instrument is available. In the third essay, we endogenize the choice of a unit emission standard. We show that, when the market is partially covered, the optimal unit emission standard is the slacker the more polluting the differentiated commodity and the higher the marginal damage from emissions. When the differentiated commodity is very polluting or the marginal damage from pollution is very high, no optimal binding standard exists. In the fourth essay, we study the impact on quality choice and aggregate emissions of two social norms. The first norm socially rewards consumers who choose the environmentally friendlier variant of the differentiated commodity, while the second punishes those consumers who purchase the more polluting variant. Our results suggest that the impacts of a social norm that rewards the purchase of environmentally friendlier products and disregards consumption reduction depend crucially on whether the market for the differentiated commodity is fully or partially covered. If it is partially covered, the norm may be detrimental to the environment in that it may induce an increase in aggregate emissions and lead to deterioration of the environment. We show that aggregate emissions increase at the margin with social rewards. A social norm, which punishes the consumers, who purchase the more polluting variant decreases aggregate emissions.
  • Lombardini-Riipinen, Chiara (Helsingin yliopisto, 2002)
  • Lof, Matthijs (Helsingin yliopisto, 2013)
    The way in which market participants form expectations affects the dynamic properties of financial asset prices and therefore the appropriateness of different econometric tools used for empirical asset pricing. In addition to standard rational expectations models, this thesis studies a class of models in which boundedly rational agents may switch between various simple expectation rules. A well-known specific example features fundamentalists, who target the fundamental value of the asset, and chartists, who try to exploit recent trends in price movements. A crucial feature of these models is that not all agents have to follow the same expectation rule, but are allowed to form heterogeneous beliefs. Chapters 2 and 3 present empirical estimations of two specific heterogeneous agent models. Since the data generating processes are assumed to be nonlinear, due to the agents' switching between expectation rules, nonlinear regression models are applied. By framing the empirical results in a heterogeneous agent framework, these chapters provide an alternative view on important topics in asset pricing, such as the prevalence of excess volatility and the relation between financial markets and the macro-economy. The final two chapters deal with noncausal, or forward-looking, autoregressive models. Chapter 4 shows that US stock prices are better described by noncausal autoregressions than by their causal counterparts. This implies that agents' expectations are not revealed to an outside observer such as an econometrician observing only realized market data. Simulation results show that heterogeneous agent models are able to generate noncausal asset prices. Chapter 5 considers the estimation of a class of standard rational expectations models. It is shown that noncausality of the instrumental variables does not have an impact on the consistency of the generalized method of moments (GMM) estimator, as long as agents form rational expectations.
  • Toppinen, Teemu (Helsingin yliopisto, 2014)
    This dissertation consists of five articles plus an introductory essay, the overarching goal being that of defending an expressivist view about normative thought and talk. According to expressivism, the meaning of normative sentences (e.g. 'We ought to cut down on our greenhouse gas emissions,' 'There is more to good life than enjoyment') is to be explained by their expressing broadly practical, 'desire-like,' states of mind, rather than by what they are about, or by their truth-conditions. To think that eating factory farmed meat is wrong is, then, to be in the relevant practical state to disapprove of eating factory farmed meat, say. The prevalent rival view, according to which the meaning of normative sentences and the nature of normative thought should rather be explained with reference to the way they represent the world to be, is often called 'cognitivism.' Understanding the nature and meaning of normative judgment is important if we are to make sense, for example, of the way in which the demands of morality may be objective, or of the nature of ethical disagreement. However, philosophers are increasingly finding analogous issues to be of interest also to debates in epistemology and philosophy of language and mind due to the possibility that concepts such as knowledge, evidence, meaning, and belief are "fraught with ought," that is, normative concepts of sorts. Expressivism is commonly agreed to be attractive thanks to its making sense of the distinctive features of normativity and normative thought e.g. its practical function, and the resistance of normative properties and claims to reductive analysis in naturalistic terms within a broadly naturalistic understanding of the world. But of course this view faces a number of big challenges. The introductory essay offers a brief overview of what metaethics is all about and, in particular, of the widely acknowledged successes and problems of expressivism and its competitors. (A very brief exploration of what may be some of the historical roots of expressivism is also included.) In Essay 1, "Believing in Expressivism," I outline a form of expressivism which I call the higher-order state view. According to ecumenical expressivism, defended e.g. by Michael Ridge, normative sentences express complex states consisting of certain desire-like states and descriptive beliefs. On the higher-order state view, normative sentences rather express higher-order states of having some appropriately related desires and beliefs. I argue that the higher-order state view can exploit the resources that ecumenical expressivism is sometimes supposed to have for dealing with the so-called Frege-Geach problem, and yet avoid the problems associated with the ecumenical view regarding validity, expression relation, and disagreement. In Essay 2, "Expressivism and the Normativity of Attitudes," I defend the idea that expressivism is compatible with (NA), which says that claims about propositional attitudes (such as expressivism itself) are themselves normative judgments. I also suggest that in order for this to be true, James Dreier's influential response to the problem of creeping minimalism must be slightly revised. In Essay 3, "Moral Fetishism Revisited," I defend the 'moral fetishism' argument against motivational externalism, originally presented by Michael Smith. I argue that only the internalist views on the relation of moral judgment and motivation to some of which expressivists plausibly are committed can combine two attractive theses: first, that the morally admirable are motivated to act on the reasons they take to ground actions' being right, and second, that their virtuousness need not be diminished by their acting on their thinking that performing some action would be the right thing to do. In Essay 4, "Pure Expressivism and Motivational Internalism," I examine the prospects of pure expressivism (the view that some normative sentences express only desire-like states) with regard to capturing the truth of an internalist thesis, (PRACTICALITY), which says that, necessarily, if one judges that φ-ing would be desirable, then, if one is rational, one is thereby also motivated to φ. I argue that some forms of pure expressivism explain (PRACTICALITY) neatly, while others fail and should thereby be rejected. In Essay 5, "Goading or Guiding? Cognitivism, Non-cognitivism, and Practical Reasoning," I develop a challenge for all stripes of cognitivists, and identify a reason for preferring expressivism over cognitivism. One of my main goals here is to introduce the idea that a metaethical theory of the nature of normative judgment must be compatible with a plausible account of the reasons for which we act when we act on the basis of our normative judgments. Another main goal of the paper is to argue that when we try to satisfy this desideratum for a metaethical theory, we notice that cognitivism faces a challenge that at least some forms of expressivism elegantly sidestep. If cognitivism is true, then it is hard to explain how someone could perform an action, φ, on the basis of her judgment that she ought to φ, and thereby for the reasons that one might sensibly take to explain why she ought to φ. If we accept expressivism or, more precisely, either the ecumenical or the higher-order state view no similar problem arises.
  • Vauhkonen, Jukka (2005)
    This thesis consists of an introductory chapter and four essays on the financial contracting theory. In the first essay, we argue that many adverse selection models of the standard one-period loan contracts are not robust to changes in the market structure. We argue that debt is not an optimal contract in these models, if there is only one (monopoly) financier instead of a large number of competitive financiers. In the second essay, we examine the welfare effects of allowing banks to hold equity in their borrowing firms. According to the agency cost literature, banks´ equity stakes in their borrowing firms would seem to alleviate firms´ asset substitution moral hazard problem associated with debt financing. We argue that this alleged benefit of banks´ equity holding is small or non-existent when banks are explicitly modeled as active monitors and when firms have access also to market finance. In the third essay, we extend the well-known incomplete contracting model of Aghion and Bolton to attempt to explain the empirical observation that the allocation of control rights between the entrepreneur and the venture capitalist is often contingent in the following way. If the indicator of the company's performance (eg earnings before taxes and interest) is low, the venture capital firm obtains full control of the company. If company performance improves, the entrepreneur retains or obtains more control rights. If company performance is very good, the venture capitalist relinquishes most of his control rights. The fourth essay is a short note, in which we show that main result of the model of Aghion and Bolton related to the optimality properties of contingent control allocations under incomplete contracting environment holds only if an additional condition is satisfied.
  • Jalava, Jukka (Tilastokeskus, 2007)
    This study examines Finnish economic growth. The key driver of economic growth was productivity. And the major engine of productivity growth was technology, especially the general purpose technologies (GPTs) electricity and ICT. A new GPT builds on previous knowledge, yet often in an uncertain, punctuated, fashion. Economic history, as well as the Finnish data analyzed in this study, teaches that growth is not a smooth process but is subject to episodes of sharp acceleration and deceleration which are associated with the arrival, diffusion and exhaustion of new general purpose technologies. These are technologies that affect the whole economy by transforming both household life and the ways in which firms conduct business. The findings of previous research, that Finnish economic growth exhibited late industrialisation and significant structural changes were corroborated by this study. Yet, it was not solely a story of manufacturing and structural change was more the effect of than the cause for economic growth. We offered an empirical resolution to the Artto-Pohjola paradox as we showed that a high rate of return on capital was combined with low capital productivity growth. This result is important in understanding Finnish economic growth 1975-90. The main contribution of this thesis was the growth accounting results on the impact of ICT on growth and productivity, as well as the comparison of electricity and ICT. It was shown that ICT s contribution to GDP growth was almost twice as large as electricity s contribution over comparable periods of time. Finland has thus been far more successful as an ICT producer than a producer of electricity. Unfortunately in the use of ICT the results were still more modest than for electricity. During the end of the period considered in this thesis, Finland switched from resource-based to ICT-based growth. However, given the large dependency on the ICT-producing sector, the ongoing outsourcing of ICT production to low wage countries provides a threat to productivity performance in the future. For a developed country only change is constant and history teaches us that it is likely that Finland is obliged to reorganize its economy once again in the digital era.
  • Turunen, Harri (Helsingin yliopisto, 2015)
    I study the importance of variation in the higher moments of macroeconomic and financial quantities. The first essay considers the effects of uncertainty on the fiscal multiplier when the economy has hit the zero lower bound (ZLB) on the nominal rate in a relatively standard New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model. As the ZLB is a very strong form of nonlinearity, the model is solved using a numerical method. Uncertainty in government spending and productivity are modeled as stochastic volatility. Confirming previous research (e.g. Christiano, Eichenbaum and Rebelo, 2011), the multiplier is found to be higher when at the bound, and the effects of volatility shocks are found to be noticeable (e.g. Basu and Bundick, 2015). Uncertainty is found to have an impact on the multiplier: when future spending is uncertain, the multiplier is high, but when future productivity is uncertain, the multiplier is low. The second essay studies whether or not DSGEs are able to generate simulated realizations with realistic third and fourth moments. Many time series in macroeconomics and finance exhibit either excess kurtosis or skewness or both. However, as was shown by Ascari et al (2013), standard DSGEs such as the neoclassical growth model or the model of Smets and Wouters (2007) are unable to produce realizations with reasonable moments, regardless of shock distribution or the order of the Taylor approximation applied. My results however indicate that this is mostly due to lack of nonlinearity in the models, since especially a model with a very strong form of nonlinearity, such as the ZLB, is able to generate non-Gaussian realizations. The third essay considers the pricing of macroeconomic risk. The theory of Merton (1973) implies that there can be other sources of priced risk than the risk associated with the return on the market portfolio and that an appropriate measure for sensitivity of a stock to this risk is the covariance of the return of that stock with the source of that risk. I apply the multivariate volatility model of Engle (2002) to estimate time-varying covariances of US stock portfolios with a variety of US macro time series. The finding is that inflation and unemployment are priced in the market and earn a negative premium, while the growth rate of industrial production and the Case-Shiller house price index are not priced.
  • Pääkkönen, Jenni (Helsingin yliopisto, 2009)
    In public economics, two extremist views on the functions of a government compete: one emphasizes government working for the public interest to provide value for the citizens, while another regards government mainly as a workhorse for private interests. Moreover, as the sole legitimate authority, the government has the right to define the rules and laws as well as to enforce them. With respect to regulation, two extremes arise: from too little regulation to too much of it. If the government does not function or ceases to exist, the state falls into anarchy or chaos (Somalia). If it regulates too much, it will completely suffocate private activities, which might be considered extralegal (the former Soviet Union). In this thesis I scrutinize the government s interventionist policies and evaluate the question of how to best promote economic well-being. The first two essays assume that the government s policies promote illegal activity. The first paper evaluates the interaction between the government and the mafia, and pays attention to the law enforcement of underground production. We show that the revenue-maximizing government will always monitor the shadow economy, as monitoring contributes to the government s revenue. In general, both legal and illegal firms are hurt by the entry of the mafia. It is, however, plausible that legal firms might benefit by the entry of the mafia if it competes with the government. The second paper tackles the issue of the measurement of the size of the shadow economy. To formulate policies it is essential to know what drives illegal economic activity; is it the tax burden, excess regulation, corruption or a weak legal environment? In this paper we propose an additional explanation for tax evasion and shadow production, namely cultural factors as manifested by religion as determinants of tax morality. According to our findings, Catholic and Protestant countries do not differ in their tax morale. The third paper contributes to the literature discussing the role of the government in promoting economic and productivity growth. Our main result is that, given the complex relationship between economic growth and economic freedom, marketization has not necessarily been beneficial in terms of growth. The last paper builds on traditional growth literature and revisits the debate on convergence clubs arising from demographic transition. We provide new evidence against the idea that countries within a club would converge over time. Instead, we propose that since the demographic transition is a dynamic process, one can expect countries to enter the last regime of stable, modern growth in stages.
  • Pietilä-Hella, Riitta (2000)
    This essay collection is comprised of six previously unpublished essays. All of the essays deal with the following questions: the manifestation of individuality and individualization and the ways and means in which they are detached and involved. The framework is based upon the time in which we now live, which is dealt with using classical perspectives. These perspectives are used in order to reflect the present day; Georg Simmel and Norbert Elias from a sociologist point of view and philosopher Emmanuel Levinas from a philosophical. The use of the classics for perspective and the essay format both interact and are interdependent upon one another. The research method used - the essay format - can be seen in modern-day diagnostics. The sociological critical essay is embodied in interdisciplinary research, which deals with literature, philosophy, art and science. The use of the essay format as the research method aspired to prevent what can be seen as objectionable prevailing thought and conformity. With the help of the classics, the essays aspired to bring to light four perspectives. The first is the perspective of the past, which reveals classical thought through the interpretation of their own times. The second perspective is the present-day, using classical times as a point of departure. In this way, the classics aid us in seeing our own times and its phenomena. The third is to look at our own times diagonally, disengaging from current discussion and the need to discover, in the use of professional jargon, the origin and points of fusion of the terminology. The fourth was detachment, estimation and the attempt to see things in a fresh way. The latter two goals are connected to Norbert Elias's concept of involvement-detachment as a cognitive device. The essay collection brings forth three themes concerning individuality and individuali-zation. The first is the orientation framework of the perspective of the individual. The question arose whether the discussion of individuality and individualization has come to the stage where a centuries old anthropocentric orientation is to be seen as a serious challenger? It remains to be seen whether these are based on biocentric orientation or some other framework. The second theme revolves around the question of whether we have come to the stage where individuality and individualization are involved in an entirely different fashion. One perspective which becomes apparent in this essay collection is Emmanuel Levinas's idea of ethics as the first philosophy, which is the foundation of individualization. The third and central result is that the present-day horizontal can be looked at in a different light and demands a new orientation. What and how can individuality and individualization "be", if and when the framework becomes contingent and ambivalent? Keywords: individuality, individualization, social, the civilizing process
  • Vanhala, Juuso (Helsingin yliopisto, 2007)
    The dissertation consists of an introductory chapter and three essays that apply search-matching theory to study the interaction of labor market frictions, technological change and macroeconomic fluctuations. The first essay studies the impact of capital-embodied growth on equilibrium unemployment by extending a vintage capital/search model to incorporate vintage human capital. In addition to the capital obsolescence (or creative destruction) effect that tends to raise unemployment, vintage human capital introduces a skill obsolescence effect of faster growth that has the opposite sign. Faster skill obsolescence reduces the value of unemployment, hence wages and leads to more job creation and less job destruction, unambiguously reducing unemployment. The second essay studies the effect of skill biased technological change on skill mismatch and the allocation of workers and firms in the labor market. By allowing workers to invest in education, we extend a matching model with two-sided heterogeneity to incorporate an endogenous distribution of high and low skill workers. We consider various possibilities for the cost of acquiring skills and show that while unemployment increases in most scenarios, the effect on the distribution of vacancy and worker types varies according to the structure of skill costs. When the model is extended to incorporate endogenous labor market participation, we show that the unemployment rate becomes less informative of the state of the labor market as the participation margin absorbs employment effects. The third essay studies the effects of labor taxes on equilibrium labor market outcomes and macroeconomic dynamics in a New Keynesian model with matching frictions. Three policy instruments are considered: a marginal tax and a tax subsidy to produce tax progression schemes, and a replacement ratio to account for variability in outside options. In equilibrium, the marginal tax rate and replacement ratio dampen economic activity whereas tax subsidies boost the economy. The marginal tax rate and replacement ratio amplify shock responses whereas employment subsidies weaken them. The tax instruments affect the degree to which the wage absorbs shocks. We show that increasing tax progression when taxation is initially progressive is harmful for steady state employment and output, and amplifies the sensitivity of macroeconomic variables to shocks. When taxation is initially proportional, increasing progression is beneficial for output and employment and dampens shock responses.
  • Korkeamäki, Ossi (Government Institute for Economic Research, 2012)
    The first essay in this thesis is on gender wage differentials among manufacturing sector white-collar workers. The wage differential is decomposed into firm, job (within-firm) and individ-ual-level components. Job-level gender segregation explains over half of the gap, while firm-level segregation is not important. After controlling for firm, job and individual characteristics, the remaining unexplained wage cap to the advantage of men is six per cent of men s mean wage. In the second essay, I study how the business cycle and gender affect the distribution of the earnings losses of displaced workers. The negative effect of displacement is large, persistent and strongest in the lowest earnings deciles. The effect is larger in a recession than in a recov-ery period, and in all periods women s earnings drop more than men s earnings. The third essay shows that the transition from steady employment to disability pension de-pends on the stringency of medical screening and the degree of experience-rating of pension costs applied to the employer. The fact that firms have to bear part of the cost of employees disability pension costs lowers both the incidence of long sick leave periods and the probabil-ity that sick leave ends in a disability pension. The fourth and fifth essays are studies on the employment, wage and profit effects of a re-gional payroll tax cut experiment conducted in northern and eastern Finland. The results show no statistically significant effect on any of the response variables.
  • Sinko, Pekka (2004)
    The study consists of four essays that analyse the implications of labour taxation and unemployment insurance (UI) in the models of imperfectly competitive labour markets. The first essay studies the effects of labour taxation on wages, unemployment and efficiency in a search equilibrium model with endogenous job destruction. It is shown that the adverse employment effect of labour taxes is mainly due to prolonged unemployment spells and less so due to increased job destruction. If wage setting is based on bargaining, a pure increase in the tax progression reduces unemployment, improves the relative position of low-income workers and facilitates the emergence of low-productivity jobs. The second essay considers a set up where the economic agents perceive the link between taxes paid and the benefits received due to the centralised wage setting institutions. It is shown that centralisation promotes wage moderation, makes wages and employment less sensitive to changes in the wage taxation and reduces hours worked. With individual supply of working hours, a wage tax can even improve employment if the marginal utility of the public expenditure is sufficiently high. If a profit tax is used to finance the public provision, a higher tax reduces wages and improves employment. The third essay introduces a model where tax-alike payments are used to finance UI funds run by the industry level unions. Alternative ways to organize government subsidies are compared in a right-to-manage framework. It is shown that equilibrium unemployment is decreasing in the share of UI financed by the employed union members. A reduction in the proportional subsidies matched by an increase in the lump sum grant is shown to bring about wage moderation and improve employment. If labour market parties can influence the level of benefits, a subsidy scheme with a fixed assistance per unemployed is preferable to one covering a fixed share of the total UI costs. The fourth essay analyses the effects of UI in a job search model with endogenous search effort. The model is simulated numerically with the parameters fitted to the stylised facts of the Finnish labour market. It is shown that UI with limited potential duration promotes search effort among the long-term unemployed that have exhausted a considerable amount of the current benefit spell. The positive effect starts to dominate the earlier, the steeper is the decline in the replacement ratio and the more insecure are the job contracts. A reform that combines a declining replacement ratio with an increased initial level of benefits is shown to increase search effort throughout the benefit period.
  • Sinko, Pekka (2004)
    Tutkimus käsittää neljä artikkelia, joissa tarkastellaan työtulojen verotuksen ja työttömyysturvan vaikutuksia epätäydellisen kilpailun työmarkkinoita kuvaavissa analyyttisissa malleissa. Ensimmäinen artikkeli käsittelee työtulojen verotuksen vaikutusta työllisyyteen ja tehokkuuteen etsintämallissa, jossa työsuhteen päättyminen on endogeeninen. Osoittautuu, että verojen työllisyyttä alentava vaikutus johtuu ensisijaisesti työttömyysjaksojen pidentymisestä ja vähemmässä määrin lisääntyvistä irtisanomisista. Mikäli palkoista neuvotellaan, veroprogression kasvattaminen vähentää työttömyyttä sekä parantaa pienipalkkaisten työntekijöiden suhteellista asemaa ja edistää matalan tuottavuuden työpaikkojen syntymistä. Toinen artikkeli tarkastelee työverojen vaikutusta mallissa, jossa keskitetyn palkanmuodostuksen ansiosta otetaan huomioon verojen ja julkisen vallan tarjoamien etuisuuksien välinen yhteys. Osoittautuu, että keskitetty palkanmuodostus edistää maltillista palkkakehitystä, vähentää tehtyjä työtunteja sekä pienentää verojen negatiivista vaikutusta työllisyyteen. Kun yksilöt päättävät työtuntien tarjonnasta ja julkisten hyödykkeiden rajahyöty on riittävän korkea, palkkavero saattaa jopa parantaa työllisyyttä. Jos julkiset menot rahoitetaan voittoverolla, korkeampi verotus alentaa palkkavaateita ja parantaa työllisyyttä. Kolmannessa artikkelissa tarkastellaan erilaisia julkisen subvention muotoja mallissa, jossa ammattiliittojen ylläpitämät työttömyysturvarahastot keräävät jäseniltään veroluonteisia maksuja. Osoittautuu, että tasapainossa työttömyys on sitä alhaisempi, mitä korkeampi on työssäkäyvien jäsenten rahoitusosuus. Jos työttömyysturvan kokonaismenoihin suhteutettua julkista tukea korvataan kiinteällä tuella, palkkavaatimukset pienevät ja työllisyys paranee. Mikäli työmarkkinaosapuolet voivat vaikuttaa työttömyysturvan tasoon, kiinteään yksilökohtaiseen tukeen perustuva järjestelmä on työllisyyden kannalta parempi kuin kokonaismenoihin suhteutettu tuki. Neljäs artikkeli käsittelee työttömyysturvan vaikutuksia mallissa, jossa työnhakijan etsintäintensiteetti määräytyy endogeenisesti. Mallia simuloidaan numeerisesti käyttäen parametrejä, jotka kuvaavat tyylitellysti Suomen työmarkkinoita ja ansiosidonnaista työttömyysturvaa. Osoittautuu, että enimmäiskestoltaan rajoitettu työttömyysturva lisää pitkään työttömänä olleiden etsintäintensiteettiä. Tämä positiivinen vaikutus alkaa dominoida sitä aiemmin, mitä nopeammin korvausaste laskee ja mitä epävarmemmaksi työsuhteet koetaan. Yhdistämällä nopeampi alenema korkeampaan korvausasteen lähtötasoon voidaan työhön hakeutumista kannustaa työttömyysturvan kokonaistasoa heikentämättä.
  • Railavo, Jukka (Suomen Pankki, 2006)
    Economic and Monetary Union can be characterised as a complicated set of legislation and institutions governing monetary and fiscal responsibilities. The measures of fiscal responsibility are to be guided by the Stability and Growth Pact, which sets rules for fiscal policy and makes a discretionary fiscal policy virtually impossible. To analyse the effects of the fiscal and monetary policy mix, we modified the New Keynesian framework to allow for supply effects of fiscal policy. We show that defining a supply-side channel for fiscal policy using an endogenous output gap changes the stabilising properties of monetary policy rules. The stability conditions are affected by fiscal policy, so that the dichotomy between active (passive) monetary policy and passive (active) fiscal policy as stabilising regimes does not hold, and it is possible to have an active monetary - active fiscal policy regime consistent with dynamical stability of the economy. We show that, if we take supply-side effects into ac-count, we get more persistent inflation and output reactions. We also show that the dichotomy does not hold for a variety of different fiscal policy rules based on government debt and budget deficit, using the tax smoothing hypothesis and formulating the tax rules as difference equations. The debt rule with active monetary policy results in indeterminacy, while the deficit rule produces a determinate solution with active monetary policy, even with active fiscal policy. The combination of fiscal requirements in a rule results in cyclical responses to shocks. The amplitude of the cycle is larger with more weight on debt than on deficit. Combining optimised monetary policy with fiscal policy rules means that, under a discretionary monetary policy, the fiscal policy regime affects the size of the inflation bias. We also show that commitment to an optimal monetary policy not only corrects the inflation bias but also increases the persistence of output reactions. With fiscal policy rules based on the deficit we can retain the tax smoothing hypothesis also in a sticky price model.
  • Hämäläinen, Saara (Helsingin yliopisto, 2015)
    Our thesis has three individual papers and an introduction. It contributes to dynamic price and search theory. The first paper deals with the classic problem of trading under asymmetric information. The other two analyze retailing strategies that help lock in buyers by creating in-store frictions. In the first paper, we investigate welfare and equilibrium trading in a decentralized search market with asymmetric information and bilateral communication opportunities. Sellers and buyers meet randomly and pairwise and view a shared signal of the seller's quality. In the following signaling game, the sellers can either rely on this costless signal (pool) or costly signaling (separate). We observe that, although the average market quality is high, additional information is not generally welfare improving. All equilibria are inefficient. Contrary to the usual tradeoff between price and liquidity, we find that the signals can help sustaining stationary Markovian equilibria where higher quality is traded faster. In the second paper, we construct a novel search model that features in-store frictions and equilibrium price dispersion both within and across stores. The frictions originate from the gradual arrival of price information within stores and the existence of deadlines for buyers. We show that sellers have an incentive carry several similar items and generate price variation among these items to amplify the existing search frictions and create barriers to switching in an environment where none exist initially. It also helps them to discriminate better between buyers, who end with diverse degrees of price information. As the number of items in stock expands, sellers can extract more profits. In our third paper, we develop a price search model that features endogenous frictions in a duopolistic environment. These frictions originate from the gradual arrival or price information within stores and the existence of deadlines for buyers. We show that both sellers have a strategic incentive to generate frictions. There exists exactly two equilibria with a unique asymmetric pattern: a prominent seller, whose expected price is higher but the in-store frictions lower, and a non-prominent seller. The buyers are divided exactly equally into informed and uninformed consumers, and into those who fail to find anything. Under the Poisson process, this surplus loss is about 6 %.
  • Khondker, Aktaruzzaman (Department of Economics, Faculty of Social Sciences, 2009)
    This thesis is a collection of three essays on Bangladeshi microcredit. One of the essays examines the effect of microcredit on the cost of crime. The other two analyze the functioning mechanism of microcredit programs, i.e. credit allocation rules and credit recovery policy. In Essay 1, the demand for microcredit and its allocation rules is studied. Microcredit is claimed to be the most effective means of supplying credit to the poorest of the poor in rural Bangladesh. This fact has not yet been examined among households who demand microcredit. The results of this essay show that educated households are more likely to demand microcredit and its demand does not differ by sex. The results also show that microcredit programs follow different credit allocation rules for male and female applicants. Education is an essential characteristic for both sexes that credit programs consider in allocating credit. In Essay 2, the focus is to establish a link between microcredit and the incidence of rural crime in Bangladesh. The basic hypothesis is that microcredit programs jointly hold the group responsibility which provides an incentive for group members to protect each other from criminal gang in order to safeguard their own economic interests. The key finding of this essay is that the average cost of crime for non-borrowers is higher than that for borrowers. In particular, 10% increase in the credit reduces the costs of crime by 4.2%. The third essay analyzes the reasons of high repayment rate amid Bangladeshi microcredit programs. The existing literature argues that credit applicants are able to screen out the high risk applicants in the group formulation stage using their superior local information. In addition, due to the joint liability mechanism of the programs, group members monitor each others economic activities to ensure the minimal misuse of credit. The arguments in the literature are based on the assumption that once the credit is provided, credit programs have no further role in ensuring that repayments are honored by the group. In contrast, using survey data this essay documents that credit programs use in addition organizational pressures such as humiliation and harassment the non-payer to recover the unpaid installments. The results also show that the group mechanisms do not have a significant effect in recovering default dues.