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Welfare and bond pricing implications of fiscal stabilization policies

Christoffel, Kai; Jaccard, Ivan; Kilponen, Juha - Suomen Pankki - 2013

How do cyclical fiscal stabilisation policies affect welfare and government bond risk premia? Using a new Keynesian model we find that the effects of fiscal policy rules on the bond premium and welfare crucially depend on the source of business cycle fluctuations. The overall effect is estimated...

Persistent link: https://www.econbiz.de/10010818989

Optimal fiscal policy of a monetary union member

Orjasniemi, Seppo - Suomen Pankki - 2014

In this essay we study the optimal non-coordinated fiscal policy in a monetary union, where a common and independent monetary authority commits to optimally set the union-wide nominal interest rate. The national governments in the monetary union implement independent fiscal policies by choosing...

Persistent link: https://www.econbiz.de/10010819002

Liquidity traps and expectation dynamics: Fiscal stimulus or fiscal austerity?

Benhabib, Jess; Evans, George W.; Honkapohja, Seppo - Suomen Pankki - 2012

tailored in magnitude and duration, will insulate the economy from deflation traps. However “fiscal switching rules” that …

Persistent link: https://www.econbiz.de/10010584391

Determinacy of interest rate rules with bond transaction services in a cashless economy

Marzo, Massimiliano; Zagaglia, Paolo - Suomen Pankki - 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,...

Persistent link: https://www.econbiz.de/10005648917

‘Some unpleasant fiscal arithmetic’: the role of monetary and fiscal policy in public debt dynamics since the 1970s

Hasko, Harri - Suomen Pankki - 2007

Shocks to monetary and fiscal policy have played a major role in public debt developments in the OECD countries since the mid-1970s. According to the applied VAR approach, these shocks, taken together, explained, on average, about half of the forecast error variation in the debt to GDP ratio,...

Persistent link: https://www.econbiz.de/10005648978

Expectations, deflation traps and macroeconomic policy

Evans, George W; Honkapohja, Seppo - Suomen Pankki - 2009

zero lower bound, temporary increases in government spending can effectively insulate the economy from deflation traps. …

Persistent link: https://www.econbiz.de/10008496440

The effect of openness in a small open monetary union

Orjasniemi, Seppo - Suomen Pankki - 2010

In this paper we build a dynamic stochastic general equilibrium model of a small open monetary union with optimal monetary and fiscal policy, to study the transmission of country specific shocks and associated exchange rate fluctuations. We show that movements of the monetary union’s exchange...

Persistent link: https://www.econbiz.de/10008774237

Monetary Policy in Transition – Essays on Monetary Policy Transmission Mechanism in China

Koivu, Tuuli - Suomen Pankki - 2012

emerged as the second biggest economy in the world. In this study, we seek to illuminate the role of the monetary policy in … China differs substantially from what is typical for an advanced market economy, where an independent central bank often … that China’s monetary-policy implementation and its transmission to the real economy still rely heavily on quantitative …

Persistent link: https://www.econbiz.de/10010584388

The Exchange Rate and Monetary Conditions in the Euro Area

Mayes, David G.; Viren, Matti - Suomen Pankki - 1998

the impact of monetary policy through to the real economy and inflation in the euro area. Although the share of external … that the euro area will tend to behave like a large open economy rather than a closed economy and hence that it would be …

Persistent link: https://www.econbiz.de/10005419683

Friedman's money supply rule vs optimal interest rate policy

Evans, George W.; Honkapohja, Seppo - Suomen Pankki - 2003

Using New Keynesian models, we compare Friedman’s k-percent money supply rule to optimal interest rate setting, with respect to determinacy, stability under learning and optimality. We first review the recent literature. Open-loop interest rate rules are subject to indeterminacy and...

Persistent link: https://www.econbiz.de/10005423681