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Labour market reform and the sustainability of exchange rate pegs

Castrén, Olli; Takalo, Tuomas; Wood, Geoffrey - Suomen Pankki - 2004

adjustments. We formalise this notion by incorporating labour market rigidities into an 'escape clause' model of currency crises …. We show that the absence of structural reform makes a currency peg more fragile and undermines the credibility of the … average inflation rate when the currency peg is more vulnerable to 'busts' than 'booms'. This interaction between …

Persistent link: https://www.econbiz.de/10005648915

Sovereign risk, European crisis resolution policies and bond yields

Kilponen, Juha; Laakkonen, Helinä; Vilmunen, Jouko - Suomen Pankki - 2012

We study the effects of the ECB monetary policy and the European crisis resolution policies on the 10 year sovereign bond yields of seven European countries. We find that some of the decisions have had significant impact on sovereign bond yields and have succeeded in reducing stress in the...

Persistent link: https://www.econbiz.de/10011191539

A calibrated structural model of the Czech economy

Hlédik, Tibor - Suomen Pankki - 2003

The paper presents a structural model framework for a small open economy. The model, based on optimising households and firms, has been calibrated on Czech macroeconomic data in order to develop an analytic framework suitable for analysing key policy questions related to the Czech Republic’s...

Persistent link: https://www.econbiz.de/10005771136

Monetary policy and learning in an open economy

Ellison, Martin; Sarno, Lucio; Vilmunen, Jouko - Suomen Pankki - 2004

In this paper, we examine the incentives for central bank activism and caution in a two-country open-economy model with uncertainty and learning. We find that the presence of a strategic interaction between the home and foreign central banks creates an additional motivation for caution in...

Persistent link: https://www.econbiz.de/10005423715

Optimal discretionary monetary policy in the open economy: Choosing between CPI and domestic inflation as target variables

Guender, Alfred V. - Suomen Pankki - 2003

In open economy, a choice can be made between two measures of inflation for use as a target variable: CPI inflation or domestic inflation. This paper considers flexible and strict inflation targeting strategies and explores the circumstances under which a domestic inflation target is preferred...

Persistent link: https://www.econbiz.de/10005423724

Optimal monetary policy under heterogeneity in currency trade

Bask, Mikael - Suomen Pankki - 2007

trend extrapolation or chartism, which is a form of technical trading, in currency trade to examine the prerequisites for …

Persistent link: https://www.econbiz.de/10005648971

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

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

The rigidity bias

Herrala, Risto - Suomen Pankki - 2003

We study the basic economic problem of choice between long-term and short-term commitments under a general characterization of uncertainty (aggregate uncertainty). When contingencies are contractible, a perfect market of Arrow-Debreau contingent claims implements the social optimum. When...

Persistent link: https://www.econbiz.de/10005207147

Essays on empirical macroeconomics

Mehrotra, Aaron N. - 2006

Persistent link: https://www.econbiz.de/10003367200

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