We investigate the causes of the Finnish Great Depression, 1990-1993. We find that the collapse of the overheated financial and banking sectors starting in 1989 was the trigger of the economic crisis. Foreign shocks, which include the collapse of trade with USSR in 1991, can account for at most...

This paper presents Aino 2.0 – the dynamic stochastic general equilibrium (DSGE) model currently used at the Bank of Finland for forecasting and policy analysis. The paper provides a detailed theoretical description of the model, its estimation and how it can be used to interpret the evolution...

We revisit the empirical performance of the Q theory of investment, explicitly taking into account the frequency dependence of investment, Tobin's Q, and cash flow. The time series are decomposed into orthogonal components of different frequencies using wavelet multiresolution analysis. We find...

We estimate the ECB's monetary policy reaction function by using real time Eurosystem/ECB staff macroeconomic projection data, which are presented to the ECB's Governing Council when it assesses the monetary policy stance in the euro area. Alternative specifications of the reaction function...

We study macroeconomic consequences of a major trade disruption using the example of the Finnish-Soviet trade collapse in 1991. This is a rare case of a well-identified large trade shock in a developed economy. We find that the shock had a significant effect on Finnish output. While the direct...

In this study, the determination of optimal monetary policy in unionised economies is considered from the new political economy point of view.In the empirical part of the study it is shown that, in addition to the institutional position of the central bank, labour market institutions also matter...

Tässä artikkelissa tarkastellaan yritysdynamiikan vaikutuksia talouteen makrotasolla käyttämällä hyväksi tietoja aloittaneiden ja lopettaneiden yritysten lukumääristä ja joukosta keskeisiä makrotalouden muuttujia. Tulosten mukaan erityisesti uusien yritysten syntymisellä on tärkeä...

This paper focuses on tenure driven productivity dynamics of a firm-worker match asa potential explanation of "unemployment volatility puzzle". We let new matches andcontinuing jobs differ by their productivity levels and by their sensitivity to aggregateproductivity shocks. As a result, new...