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Price level targeting with evolving credibility
(23.02.2018)
Bank of Finland Research Discussion Papers 5/2018
Bank of Finland Research Discussion Papers 5/2018
We examine global dynamics under learning in a nonlinear New Keynesian model when monetary policy uses price-level targeting and compare it to inflation targeting. Domain of attraction of the targeted steady state gives a ...
Information acquisition during a descending price auction with asymmetrically informed players
(27.01.2017)
Bank of Finland Research Discussion Papers 5/2017
Bank of Finland Research Discussion Papers 5/2017
This paper considers equilibrium behavior in a descending price auction with two players that are asymmetrically informed. The ”informed” player knows his valuation while the other does not. The uninformed player can acquire ...
House prices, lending standards, and the macroeconomy
(26.01.2017)
Bank of Finland Research Discussion Papers 4/2017
Bank of Finland Research Discussion Papers 4/2017
I study the link between house prices, lending standards, and aggregate over-investment in housing. I develop a model of the housing market where the credit market is affected by asymmetric information. Selection is towards ...
Extreme events and optimal monetary policy
(06.02.2018)
Bank of Finland Research Discussion Papers 4/2018
Bank of Finland Research Discussion Papers 4/2018
This paper studies the implication of extreme shocks for monetary policy. The analysis is based on a small-scale New Keynesian model with sticky prices and wages where shocks are drawn from asymmetric Generalized Extreme ...
Price rigidities and the granular origins of aggregate fluctuations
(05.02.2018)
Bank of Finland Research Discussion Papers 3/2018
Bank of Finland Research Discussion Papers 3/2018
We study the ability of sectoral shocks to generate aggregate fluctuations in a multi-sector general equilibrium model featuring sectoral heterogeneity in price stickiness, sector size, and input-output linkages. We show ...
Comparing inflation and price level targeting: the role of forward guidance and transparency
(07.04.2015)
Bank of Finland Research Discussion Papers 9/2015
Bank of Finland Research Discussion Papers 9/2015
We examine global dynamics under learning in New Keynesian models with price level targeting that is subject to the zero lower bound. The role of forward guidance is analyzed under transparency about the policy rule. ...
Optimal monetary policy under bounded rationality
(19.04.2018)
Bank of Finland Research Discussion Papers 9/2018
Bank of Finland Research Discussion Papers 9/2018
Optimal monetary policy under discretion, commitment, and optimal simple rules regimes is analyzed through a behavioral New Keynesian model. Flexible price level targeting dominates under discretion; flexible inflation ...
Macroprudential measures and housing markets: a note on the empirical literature
(20.06.2016)
Bank of Finland Research Discussion Papers 18/2016
Bank of Finland Research Discussion Papers 18/2016
The global financial crisis has led to increased attention on the relationship of household indebtedness and systemic risks. As a result, macroprudential measures aimed at reducing the risks have been introduced in many ...
Enforcement of banking regulation and the cost of borrowing
(18.10.2018)
Bank of Finland Research Discussion Papers 19/2018
Bank of Finland Research Discussion Papers 19/2018
We show that borrowing firms benefit substantially from important enforcement actions issued on U.S. banks for safety and soundness reasons. Using hand-collected data on such actions from the main three U.S. regulators and ...
Revisiting intertemporal elasticity of substitution in a sticky price model
(09.06.2021)
Bank of Finland Research Discussion Papers 9/2021
Bank of Finland Research Discussion Papers 9/2021
Macroeconomic models typically assume additively separable preferences where consumption enters the utility function in a logarithmic form. This restriction implies that consumption growth is highly sensitive to movements ...