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Inflationary household uncertainty shocks
(14.02.2022)
Bank of Finland Research Discussion Papers 5/2022
Bank of Finland Research Discussion Papers 5/2022
I construct a novel measure of household uncertainty based on survey data for European countries. I show that household uncertainty shocks do not universally behave like negative demand shocks. Notably, household uncertainty ...
Determinacy and E-stability with interest rate rules at the zero lower bound
(15.11.2021)
Bank of Finland Research Discussion Papers 14/2021
Bank of Finland Research Discussion Papers 14/2021
We evaluate and compare alternative monetary policy rules, namely average inflation targeting, price level targeting, and traditional inflation targeting rules, in a standard New Keynesian model that features recurring, ...
Forward guidance with unanchored expectations
(31.08.2021)
Bank of Finland Research Discussion Papers 11/2021
Bank of Finland Research Discussion Papers 11/2021
We study zero interest-rate policy in response to a large negative demand shock when long-run expectations can fall over time. Because falling expectations make monetary policy less effective by raising real interest rates, ...
When uncertainty decouples expected and unexpected losses
(26.01.2022)
Bank of Finland Research Discussion Papers 4/2022
Bank of Finland Research Discussion Papers 4/2022
A parsimonious extension of a well-known portfolio credit-risk model allows us to study a salient stylized fact – abrupt switches between high- and low-loss phases– from a risk-management perspective. As uncertainty about ...
Euro Area Business Confidence and Covid-19
(15.03.2021)
Bank of Finland Research Discussion Papers 4/2021
Bank of Finland Research Discussion Papers 4/2021
I study the effects of the Covid-19 pandemic on business confidence in 11 Euro area countries and its consequent impact on economic activity. To obtain causal effects, I instrument business confidence with domestic household ...
Forecasting expected and unexpected losses
(21.12.2020)
Bank of Finland Research Discussion Papers 18/2020
Bank of Finland Research Discussion Papers 18/2020
Extending a standard credit-risk model illustrates that a single factor can drive both expected losses and the extent to which they may be exceeded in extreme scenarios, ie “unexpected losses.” This leads us to develop a ...
Effective Policy Communication : Targets versus Instruments
(10.11.2020)
Bank of Finland Research Discussion Papers 17/2020
Bank of Finland Research Discussion Papers 17/2020
Communication targeting households and firms has become a stand-alone policy tool of many central banks. But which forms of communication, if any, can reach ordinary people and manage their economic expectations effectively? ...
Identifying money and inflation expectation shocks on real oil prices
(15.06.2023)
Bank of Finland Research Discussion Papers 10/2023
Bank of Finland Research Discussion Papers 10/2023
The paper adds money supply and inflation expectations shocks to a well-known three-variable structural model that identifies oil price shocks through fundamentals affecting the oil market. Impulse responses show the ...
Belief polarization and Covid-19
(20.09.2022)
Bank of Finland Research Discussion Papers 10/2022
Bank of Finland Research Discussion Papers 10/2022
We document a remarkable increase in economic belief polarization - disagreement - regarding the future state of the economy across Europe during the Covid-19 pandemic. We find evidence suggesting that belief polarization ...
Inflationary household uncertainty shocks
(24.04.2020)
Bank of Finland Research Discussion Papers 5/2020
Bank of Finland Research Discussion Papers 5/2020
I construct a novel measure of household uncertainty based on survey data for European countries. I show that household uncertainty shocks are not universally like negative demand shocks. Notably, household uncertainty ...