Effects of exchange rate policy and imported inflation in a credit rationing economy
Aurikko, Esko (06.04.1982)
JulkaisusarjaKeskustelualoitteita. Discussion Papers
JulkaisijaBank of Finland
Julkaisun pysyvä osoite onhttps://urn.fi/URN:NBN:fi-fe2023071390599
In the paper effects of exchange rate policies and imported inflation are assessed in the case of Finland which is a small open economy with undeveloped financial markets. Under these circumstances interest rates do not equilibrate the credit market so that a simplified theoretical macromodel with credit rationing is first presented. In the second part of the paper the Bank of Finland quarterly econometric model for the Finnish economy is simulated. The most important conclusion to emerge from the simulations with the quarterly model is that the results are highly dependent on the credit market conditions.