Suomen Pankin Julkaisuarkisto
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Rational Exuberance Booms
No full textI provide a theory of information production and learning that can help account for both the excessive optimism that fueled booms preceding crises and the slow recoveries that followed. In my theory, persistence and the size of expectation errors depend on information production about changes in aggregate fundamentals. In turn information production, via credit screening, tends to fall during both very good and very bad times. The former gives rise to episodes of rational exuberance in which optimistic beliefs may sustain booms even as fundamentals decline. I also document evidence from survey forecasts consistent with the model predictions.Published in Bank of Finland DP 24/2015 http://urn.fi/URN:NBN:fi:bof-20151126145
Comparing the Chosen : Selection Bias When Selection Is Competitive
No full textConsider a decision maker who selects between paired random draws from two unconditional distributions, always selecting the larger draw in the pair. When will the resulting selection-conditioned distributions be ordered by first-order stochastic or monotone likelihood ratio dominance? In various guises, this question arises in many economic contexts—tournaments, contests, auctions, cheap-talk games, announcement returns, qualitative choice models, and treatment effects under self-selection. This paper develops simple, applicable characterizations of the properties of unconditional distributions that result in dominance conditioned on selection and uses these characterizations to analyze a number of economic selection problems
Immigrant entrepreneurship in America : Evidence from the survey of business owners 2007 & 2012
No full textWe study immigrant entrepreneurship in 2007 and 2012 using the Survey of Business Owners. First-generation immigrants create about 25% of new firms in America, but this share exceeds 40% in some states. Conditional on basic regression controls, immigrant-owned firms tend to create fewer jobs than native-owned firms, have comparable pay levels, offer fewer benefits, and engage more in international activities. Prominent tech clusters display quite pronounced shares of immigrant entrepreneurs. Our results suggest that most of the impact of immigrant high-tech entrepreneurship for tech centers happens through the quantity dimension: Silicon Valley and similar tech hubs attract many immigrant founders
Switching costs in the Finnish retail deposit market
No full textI calibrate switching cost for the Finnish retail deposit market by using the approach developed by Oz Shy (2002). It turns out that switching costs faced by deposit customers of the main Finnish banks manifest large variation and are high, ranging from 200 euros to nearly 1,400 euros. Over a 20-year period, switching costs have increased by roughly 50% in real terms, but in relation to average account balance, switching costs have not essentially changed. Changes and differences in the banks’ competitive strategies might explain the variation in switching costs across time and banks.Published in BoF DP 15/2019 http://urn.fi/URN:NBN:fi:bof-20190906143
Transactional and relational approaches to political connections and the cost of debt
No full textThis paper examines the economic effects of a firm's approach to developing and maintaining political connections. Specifically, we investigate whether lenders favor transactional connection as opposed to relational connection. By tracing firms in a politically volatile emerging democracy in Indonesia, we find that firms following a transactional political connection strategy experience a relatively lower cost of debt than those with a relational strategy. The effect is more pronounced for firms facing high financial distress. The finding is robust to cost of bank loans and a variety of regression methods. Overall, the evidence suggests that in times of frequently changing political regimes, firms benefit from a transactional relationship with politicians as it enables to update connection with the government in power. Relational connection is valuable for a firm only when the political regime connected with it gains power
Comparing financial transparency between for-profit and nonprofit suppliers of public goods : Evidence from microfinance
No full textPrevious research finds market financing is favored over relationship financing in environments of better governance, since the transaction costs to investors of vetting asymmetric information are thereby reduced. For industries supplying public goods, for-profits rely on market financing, while nonprofits rely on relationships with donors. This suggests that for-profits will be more inclined than nonprofits to improve financial transparency. We examine the impact of for-profit versus nonprofit status on the financial transparency of firms engaged with supplying public goods. There are relatively few industries that have large number of both for-profit and nonprofit firms across countries. However, the microfinance industry provides the opportunity of a large number of both for-profit and nonprofit firms in relatively equal numbers, across a wide array of countries. Consistent with our prediction, we find that financial transparency is positively associated with a for-profit status. Results will be of broad interest both to scholars interested in the roles of transparency and transaction costs on market versus relational financing as well as to policy makers interested in the impact of for-profit on the supply of public goods, and on the microfinance industry in particular
Puheet ja esitelmät : Välimäki, Tuomas 2019
No full textVuosittainen pdf-kooste suomenpankki.fi-sivustolla julkaistuista johtokunnan puheista edellisvuodelta. Pdf-tiedostot ovat tämän viestin liitteenä
Suomen Pankin eläkerahaston vuosikertomus 2019
No full text1 Suomen Pankin eläkerahasto .......2
2 Eläkevastuu ja maksetut eläkkeet......3
3 Tilinpäätös ...... 4
3.1 Tase....... 4
3.2 Tuloslaskelma....... 5
3.3 Suomen Pankin eläkerahaston tilinpäätöksen kommentit ......
Long-run inflation expectations in the ECB survey of professional forecasters: what do the survey responses tell us?
No full textResearch background: At the background, there are issues related to policy credibility and policy targets. For these issues, long-term forecasts can provide important information. Of course, long-term forecasts are needed also e.g. for evaluation of real returns. Purpose of the article: This paper tries to find out how informative the ECB Survey of Professional Forecasters data on long-term inflation prospects are from the point of view of the overall quality of the survey and on the other hand from the point of view of monetary policy credibility. Methods: The analysis makes use of individual forecaster level quarterly panel data for the period 1999Q1?2018Q4. Conventional panel econometrics tools are used to find out whether forecasts are sensitive to changes in actual inflation and other relevant variables. Findings & Value added: We find some weaknesses considering the size of the survey, the selection of the sample (more precisely the participation to the survey) and the inertial responses of forecasters which suggest that the survey values are not actively updated. Moreover, we find that towards the end of the sample period, the survey values are related to actual inflation and to short-term expectations, which is not consistent with the credibility of the official inflation target