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Suvanto, Antti; Hukkinen, Juhana - Suomen Pankki - 2004

. This was a period of very low inflation. The rate of growth in the aggregate price level was occasionally very close to … inflation. The declining prices cannot, however, be explained by lack of demand or any generalized deflationary tendencies … develops a new method for looking at the composition of inflation and illustrating how relative price dynamics interact with …

Persistent link: https://www.econbiz.de/10005648879

Expectations, learning and monetary policy: an overview of recent research

Evans, George W; Honkapohja, Seppo - Suomen Pankki - 2007

Expectations about the future are central for determination of current macroeconomic outcomes and the formulation of monetary policy. Recent literature has explored ways for supplementing the benchmark of rational expectations with explicit models of expectations formation that rely on...

Persistent link: https://www.econbiz.de/10005419689

Adaptive learning and monetary policy design

Evans, George W.; Honkapohja, Seppo - Suomen Pankki - 2002

We review the recent work on interest rate setting, which emphasizes the desirability of designing policy to ensure stability under private agent learning. Appropriately designed expectations based rules can yield optimal rational expectations equilibria that are both determinate and stable...

Persistent link: https://www.econbiz.de/10005648862

Performance of monetary policy with internal central bank forecasting

Honkapohja, Seppo; Mitra, Kaushik - Suomen Pankki - 2002

Recent models of monetary policy have analysed the desirability of different optimal and ad hoc interest-rate rules under the restrictive assumption that forecasts of the private sector and central bank are homogeneous. In this paper, we study from a learning perspective the implications of...

Persistent link: https://www.econbiz.de/10005648958

Robust learning stability with operational monetary policy rules

Evans, George W; Honkapohja, Seppo - Suomen Pankki - 2007

We consider the robust stability of a rational expectations equilibrium, which we define as stability under discounted (constant gain) least-squares learning, for a range of gain parameters. We find that for operational forms of policy rules, ie rules that do not depend on contemporaneous values...

Persistent link: https://www.econbiz.de/10005648984

Kiss me deadly: From Finnish great depression to great recession

Gulan, Adam; Haavio, Markus; Kilponen, Juha - Suomen Pankki - 2014

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...

Persistent link: https://www.econbiz.de/10010945114

Financial market volatility: informative in predicting recessions

Annaert, Jan; Ceuster, Marc J.K. De; Valckx, Nico - Suomen Pankki - 2001

It is commonly agreed that the term spread and stock returns are useful in predicting recessions. We extend these empirical findings by examining interest rate and stock market volatility as additional recession indicators. Both risk-return analysis and the theory of investment under uncertainty...

Persistent link: https://www.econbiz.de/10005648836