Browsing by study line "General track"

Carbon pricing is a cost-effective instrument of climate change mitigation policy. Its implementation is, however, limited by various political constraints. The goal of this thesis is to examine what factors empirically explain cross-country variation in carbon pricing policy. Understanding the political constraints limiting carbon pricing may have implications for policy design. Previous literature on the empirical determinants of carbon pricing policy has focused mostly on determinants based on political economy theory, such as variation in domestic interests, and been conducted with data only on explicit carbon pricing. Implicit carbon prices created by fuel excise taxes are, however, a significant part of the total price on emissions. This thesis contributes to existing literature by introducing two new determinants in public finance considerations and country-level social cost of carbon as well as utilizing broader carbon pricing data. Empirical methods used include regression based on maximum-likelihood estimation of censored data and multiple linear regression. The size of the public sector is found to have a statistically significant positive association with carbon pricing regardless of the model used. This supports the hypothesis that cross-country variation in carbon pricing is empirically explained by a need to finance public spending and by the double-dividend hypothesis. Other factors that are found to have a clear positive association with carbon pricing are level of democracy, administrative capacity, and GDP per capita. The results are somewhat mixed concerning the effect of other political institutions related factors as well as factors related to carbon intensity. The hypothesis that country-level social cost of carbon positively affects carbon pricing is clearly rebuked which suggests that a competitive game does not describe national-level policymakers’ decision-making. The results of the thesis should not, however, be interpreted as causal because of omitted variable bias, reverse causality, and a lack of time-series data.

Wage discrimination occurs when employees of equal productivity receive different wages due to characteristics such as ethnicity, sex, or nationality, which do not affect their productivity directly. One of the common challenges in empirical research on wages has always been the challenge of determining individual employees` productivity. Professional sports leagues such as NBA (National Basketball Association) provide an ideal setting for the study of salary discrimination, as the salaries, players` backgrounds, and different statistical measures of players` performance throughout their whole careers are available publicly. Therefore, economists have used professional sports leagues when studying salary discrimination by ethnicity or nationality. The objective of this research is to find out whether salary discrimination by nationality occurs in the NBA during the period between 2016 and 2018. The research consists of a literature review that introduces previous findings on salary discrimination by nationality in the NBA, and an empirical part which aim is to find out whether this discrimination still occurs in the 2016 – 2018. The dataset of this thesis consists of statistics that measure NBA players' on-court performance and salary during the 2016 – 2017 and 2017 – 2018 seasons, as well as their nationality, and physical attributes. The empirical analysis is carried out using linear regression-analysis, which has been a standard in previous researches on salary discrimination by nationality in the NBA. Moreover, this study applies Blinder-Oaxaca decomposition, which is one of the standard tools used in salary discrimination studies in general. The statistical analysis of this study does not find discrimination by nationality against either foreign or domestic born NBA-players during our sample period. Nevertheless, foreign players earn, on average, around USD 500,000.00 higher annual salaries than their American contemporaries. However, according to our analysis, this difference is explained by foreign players' on-court performance rather than their nationality. Some previous researches find that foreign players from large economic markets receive sizeable salary premiums due to marketing possibilities in their home countries. However, this study does not find the market size of a player's home country to have a statistically significant effect on their salaries. The earliest literature on salary discrimination by nationality in the NBA dates back to the 1990s. Over the years, the results of previous researches have varied between foreign or domestic players being discriminated against by nationality. However, as different tools for statistical analysis on player performance have improved drastically and basketball has indeed become a global sport over the years, it seems that discrimination by nationality does not occur in the NBA anymore in 2019.

The goal of this thesis is to analyse what are the effects of the monetary policy conducted by the European Central Bank (ECB) on Finnish macroeconomy and how persistent those effects are. The thesis assumes that because Finland contributes only a very small fraction of the economic output of the euro area, the overall economic situation of Finland does not matter from the point of view of ECB when setting the monetary policy stand for the monetary union. Based on the notation that the ECB’s monetary policy can be considered exogenous, the effects of monetary policy are estimated in the thesis by Ordinary Least Squares (OLS), while using macroeconomic variables in euro area as covariates. By including the variables that express the overall economic status of the euro area, the analysis attempts to remove the systematic part of the monetary policy when estimating the effects of monetary policy. The data used for the modelling consists of main macroeconomic variables in euro area and Finland between 1999 and 2023. These are unemployment, industrial output, inflation and the short interest rate. The interest rate variable consists of two elements. Because for a timespan of several years interest rates were stuck at zero a shadow rate is used to represent the monetary policy stand of the central bank. During the time when the zero lower bound was not binding, 1-month Euribor is used as the interest rate variable. The modelling results are quite well in line with common understanding about the nature of the monetary policy and its effects on real economy. Increase in interest rates results in increase in unemployment, fall in industrial output and decrease in inflation. There were however some uncertainties with the results when considering higher confidence levels. Overall, the results of the thesis seem to be coherent with commonly hold views about the effects of the monetary policy. The chosen empirical approach seems to yield similar results as more commonly used SVAR and DGSE models. The conclusion of thesis is that the monetary policy does impact the real economic activity as is expected.

In this thesis, I analyze the causes and consequences of the Asian Crisis 1997 and simulate it with Dynare. The model includes financial accelerator mechanism, which in part explains the dynamics and the magnitude of the crisis via balance sheet effects. I find that the major components of the crisis were highly similar to other crisis that had happened in other emerging economies: High levels of foreign-currency denominated debt, unsound financial regulation, and fixed exchange rates with skewed valuation. Even though this simulation do not specifically incorporated different exchange rate regimes into the simulation, the previous literature draw a clear conclusion that flexible exchange rates lessen the shock’s effects on the economy. Thailand, as well as other ASEAN-countries during the crisis, faced severe economic contraction as well as changes in political landscape: Due to the crisis, Thailand’s GDP contracted over 10 percent, the country lost almost a million jobs, and the stock exchange index fell 75 percent. In addition, the country underwent riots, resignation of ministers, and several political changes towards more democratic institutions, even though faced some backlash and re-entry of authoritarian figures later. As the crisis worsened, IMF collected a large rescue package that was given to ASEAN-countries with preconditioned austerity policies. The simulation with recalibrated parameter-values seems to be relatively accurate. The dynamics and the impact of the crisis is captured realistically with correct magnitudes. The financial accelerator mechanism accounts a large part of the shock’s impact on investment and companies net worth, but do not account much on overall decline in output.

This thesis examines the macroeconomic impact of Covid-19, constructing a DSGE model incorporating wage rigidity and consumption habit. This paper captures the characteristics of the Finnish economy, such as high wages and high consumption habits, and aims to analyze the macroeconomic impact of Covid-19 in Finland. Based on the New Keynesian DSGE model and combined with the SVAR method, focusing on the adverse effects of Covid-19 and analyzing how to mitigate its negative effects. After building the DSGE model, Bayesian estimation was performed using the parameters of Kilponen (2016) as the prior distribution, after which impulse response analysis was performed. At the same time, the effectiveness of fiscal policy and monetary policy is analyzed. The results of the empirical model support the conclusions in the theoretical model. The results show that the decline in utility due to insufficient consumption preferences significantly impacts consumption and output, causing aggregate consumption to decline and remain below steady-state levels for a long time. The level of labor supply is negatively affected by underconsumption. But the shock to consumer preference increased investment, offsetting some of the negative shock to output. Inflation and real interest rates also took a downward hit. Real interest rates first fall and then rise but remain below a stable level for a long time as the supply of capital rises when the demand for capital falls. A negative shock to technology causes aggregate consumption and aggregate output, and labor and capital goods to fall. In contrast, a fall in capital value causes Tobin's q to fall. Looking at the impact time of the impulse response, we find that the negative impact on macroeconomic variables is large and long-lasting. A positive government spending shock of one standard deviation would directly increase aggregate output, but its impact on output would be diminished. Compared with fiscal policy and monetary policy, the role of government spending is more likely to bring the economy into a stable state, and its response is more sensitive. We find that fiscal policy has a more significant impact on macroeconomic regulation; this suggests that monetary and fiscal policy need to work together in the context of high inflation and low interest rates. Fiscal policy drives economic recovery and can provide strong support for the realization of monetary policy.

In Finland, entrepreneurs (both employers and self-employed) are, compared to salaried employees, free to increase their compulsory retirement insurance contributions to the public pension fund; this being an alternative to additional saving for retirement in private pension funds. This thesis seeks to identify and further examine factors which supposedly influence entrepreneurs‘ perceived sufficiency of their retirement insurance payments . The purpose is to subsequently recommend retirement policy designs which would incentivize Finnish entrepreneurs to increase their contributions to the public pension fund. The empirical section of this work was conducted on a sample of 2 294 entrepreneurs (1 533 self-employed and 761 employers) who took part in the 2017 Labor Force Ad hoc Survey on Entrepreneurship carried out by Statistics Finland. The initial hypotheses gave rise to four categories of variables, presumably affecting sufficiency of retirement insurance contributions perceived by the study sample; namely, ’Personal characteristics & Business background’, ’Motivation’, ’Future perspectives’ and ’Job satisfaction & excitement’. The obtained results suggest that the majority of the selected variables have an effect on entrepreneurs’ perceived sufficiency of their pension insurance contributions. Besides, the factors identified as negatively affecting the perceived sufficiency of retirement insurance payments were more frequently present in the group of self-employed compared to the group of entrepreneurs (employers). Therefore, it is expected that the self-employed are more prone to pay themselves insufficient pension insurance contributions. However, all these factors are considered as incorrigible since they stem from the very nature of complex human behaviour. In this sense, the behavioural approach seems to be highly relevant when forming retirement insurance policies seeking to encourage prudent saving behaviour. This study applies an alternative approach of behavioural economics to the problematics of retirement saving. The first part of the thesis outlines foundations of behavioural economics which serve as a theoretical background for further analyses. For instance, propositions of procrastination, self-control and mental accounting are discussed.

Producing timely information regarding the current and future state of the economy is important for the practice of economic policy: the delay between the implementation of policy measures and the emergence of their effects is typically considerable, which creates a need to anticipate developments in macroeconomic variables. The producer price index is one such variable: producer price indices are used to track changes in the general price level of goods produced within an economy from the point-of-view of producers, which makes them prominent indicators of inflationary pressures and business cycle conditions. The principal objective of this thesis is to investigate whether the Finnish Producer Price Index for Manufactured Goods could be reliably forecasted in the short run using large sets of external predictors. Increasing the number of predictors exposes standard forecasting methods to inaccuracies and makes their application outright infeasible once the number of variables exceeds the number of observations available for the estimation of the forecasting model. Various alternative methods have been proposed to counter this issue. This thesis provides a broad overview of these methods as well as other relevant issues pertaining to the forecasting macroeconomic variables. Given that no single framework has proven to dominate others in practical applications, a selection of methods has been chosen for the empirical section of this thesis. These methods represent two different approaches to high-dimensional forecasting: dynamic factor models and penalized regressions. The effectiveness of dynamic factor models is based on the assumption that relevant information contained in high-dimensional data can be summarized using only relatively few underlying factors, the estimates of which can, in turn, be used for forecasting. The solution offered by penalized regressions, on the other hand, is based on striking a balance between the bias and variance of the forecasts. Out of the broader class of penalized methods, four different variations will be utilized in this thesis: the Ridge, Lasso, Elastic Net, and Adaptive Lasso. The empirical performance of the methods will be assessed by conducting a simulated out-of-sample forecasting experiment, in which a series of consecutive forecasts are estimated for the target variable using historical data. These forecasts are, in turn, compared to their realized counterparts. The objective of the experimental arrangement is to produce representative information regarding the empirical accuracy of the respective forecasting models by emulating circumstances faced in real-time forecasting: only information that would have been available at the time is used to produce each forecast. The set of predictors used in the experiment is composed of monthly economic time series collected from a variety of sources. Based on the forecasting experiment, the benefit of the high-dimensional models in terms of average forecasting accuracy turns out to be only marginal in comparison to a univariate autoregressive benchmark at the one-, two-, and three-month horizons. Moreover, the differences among the respective high-dimensional methods are found to be insignificant. On the other hand, more favorable results are achieved by using relatively timely market-based variables to predict the concurrent rather than strictly future values of the index. In this case, the penalized models perform particularly well. The results indicate that leveraging the advantage in publication lag enjoyed by external predictors for the purpose of contemporaneous prediction, or nowcasting, could represent the most potential for predicting the producer price index.

Työn tuottavuuden merkitys kansantalouden tasolla talouskasvulle ja mikrotaloustasolla yritysten tapauksessa niiden menestymiselle on merkittävä. Työn tuottavuuteen vaikuttavien tekijöiden kirjo on laaja ja tässä tutkielmassa keskitytään tarkastelemaan henkisen pääoman vaikutusta työn tuottavuuteen. Tarkastelun keskiössä on keinot henkisen pääoman konvertoimiseksi henkilöstötuottavuudeksi ja henkilöstötuottavuuden tilan mallintamiseksi. Tutkimuskysymyksenä tarkastellaan suomalaisten yritysten kannattavuuden ja henkilöstötuottavuusindeksin korrelaatiota. Henkisen pääoman olemassaolo ei ole tae yrityksen menestymiselle. Keskeistä henkilöstötuottavuuden kannalta on ottaa yrityksen omaama henkinen pääoma hyötykäyttöön. Haasteelliseksi tilanteen tekee se, että henkinen pääoma on sidoksissa yrityksen henkilöstöön. Tutkielmassa esiteltävän aiemman kirjallisuuden mukaan henkilöstötuottavuuden stimuloimisessa johtamiskäytänteet ja toimintatavat työyhteisöissä ovat mahdollisia keinoja vaikuttaa henkilöstötuottavuuden kehittymiseen työyhteisössä. Tutkielmassa henkilöstötuottavuutta kuvataan henkilöstötuottavuusindeksin (HTI) avulla. Menetelmä perustuu Ossi Auran ja muun tutkimusryhmän kehittämään malliin kuvata työyhteisön henkilöstötuottavuuden tilaa. Mallin keskeisiä piirteitä on jaotella henkilöstötuottavuus kolmen osatekijän summaksi: motivaatio, osaaminen ja työkyky. Tiedonkeruumenetelmänä henkilöstötuottavuusindeksin laskemiseksi toimii työyhteisöiden tilaa kuvaavien työyhteisökyselyiden hyödyntäminen. Yritysten taloudellista tilaa tarkastellaan tilinpäätöstietojen perusteella ja kannattavuuden indikaattorina toimii yrityksen käyttökateprosentti. Tutkimusmenetelmänä toimii pitkittäinen tutkimus. Aineisto on kerätty Työeläkeyhtiö Elon asiakkaille tarkoitetun työyhteisökyselyn avulla siten, että aineistoon valittu yritys on suorittanut vähintään kahdesti. Henkilöstötuottavuusindeksin ja yritysten taloudellisen tilanteen yhteyttä tarkastellaan lineaarista regressiomallia hyödyntäen. Empiirisessä osiossa tarkastelun kohteena on henkilöstötuottavuusindeksin ja yritystoiminnan kannattavuuden sekä henkilöstötuottavuusindeksin ja yritystoiminnan kasvun yhteys. Kannattavuuden muutosta kuvataan sekä käyttökateprosentin prosenttiyksiköittäisen että prosentuaalisen muutoksen avulla. Liiketoiminnan kasvua kuvataan liikevaihtoprosentin prosentuaalisen muutoksen avulla. Lineaarisen regressiomallin tuloksia tarkastellaan koko aineiston tasolla sekä osajoukkojen osalta valittujen määrittävien tekijöiden osalta. Tutkielman empiirisen osion tuloksien mukaan HTI:n muutoksien osalta, motivaatio on tärkein kolmesta osatekijästä. Itse tutkimuskysymyksen osalta saavutetut tulokset osoittavat, että henkilöstötuottavuuden ja yritysten kannattavuuden välillä ei havaita selkeää yhteyttä. Yhteyttä ei ole havaittavissa myöskään henkilöstötuottavuusindeksin ja liiketoiminnan kasvun väliltä. Tutkielman empiirinen osuus antaa hyvin perspektiiviä tutkittavaan ilmiöön ja antaa syytä aiempien tutkimusten tulosten kriittiselle tarkastelulle. Henkilöstötuottavuusindeksin muutoksien osalta motivaatio on tärkein kolmesta osatekijästä.

Finanssikriisin seurauksena keskuspankkien rahapolitiikan liikkumavara on vähentynyt, mikä on johtanut vaihtoehtoisten rahapolitiikan strategioiden harkitsemiseen. Yksi ehdotetuista strategioista on siirtyminen hintatasotavoitteeseen. Hintatasotavoitteessa keskuspankki pyrkii pitämään hintojen kehityksen valitsemallaan tavoiteuralla ja korjaa inflaatiotavoitteesta poiketen menneiden shokkien aikaansaamat poikkeamat. Tutkielmassa tarkastellaan viimeaikaista tutkimusta hintatasotavoitteseen liittyen ja selvitetään voisiko hintatasotavoite olla parempi rahapolitiikan strategia kuin inflaatiotavoite. Tarkastelun keskiössä ovat hintatasotavoitteen vahvat oletukset, mahdolliset edut ja siirtymän riskit. Tutkimusmenetelmänä on kirjallisuuskatsaus ja tavoitteena on muodostaa kokonaiskuva tutkimuksesta ja selvittää mihin jatkotutkimus pitäisi suunnata. Hintatasotavoitteen mahdollisia etuja ovat hintojen pitkän aikavälin ennustettavuus, inflaation ja tuotannon volatiliteetin vähentyminen sekä parempi suoriutuminen nollakorkorajalla. Edut voivat olla haastavia saavuttaa ja ne nojaavat vahvoihin oletuksiin inflaatio-odotuksien muodostumisesta uuskeynesiläisen mallin mukaan sekä keskuspankin kyvystä sitoutua siihen strategiana. Hintatasotavoitteeseen siirtymiseen liittyy paljon riskejä ja kustannuksia, joiden seurauksena nettovaikutus voi olla negatiivinen. Talouden toimijat eivät välttämättä sisäistä uutta strategiaa, jolloin vaikutus inflaatio-odotuksiin jää vaimeaksi. Lisäksi se saattaa aiheuttaa haasteita keskuspankin kommunikaatiolle ja uskottavuuden ylläpitämiselle. Hintatasotavoite suoriutuu teoriassa inflaatiotavoitetta paremmin, mutta tulokset ovat malliriippuvaisia ja usein ristiriitaisia keskenään. Lisätutkimuksen tarpeet liittyvät inflaatio-odotuksien muodostumiseen, oppimisvaiheen kestoon ja keskuspankin uskottavuuden ylläpitämiseen. Keskuspankit näkevät hintatasotavoitteen riskit edelleen merkittävinä ja siirtymä olisi monella tapaa hyppy tuntemattomaan.

In my thesis, I estimate the childhood exposure effects of regions in Finland on the probability of completing high school matriculation examination. I estimate the degree to which the differences in high school matriculation rates across regions are driven by the causal effects of places. I study almost 180,000 children who move across regions by exploiting variation in the age of children at the time of the move. I find that neighbourhoods might have a significant childhood exposure effect on girls of low-income families. The outcomes of girls of low-income families change linearly in proportion to the amount of time they spend growing up in a new area at a rate of approximately 6 % per year of exposure. It implies that children who move at birth would pick up 90 % of the difference in permanent residents’ outcomes between their origin and destination regions by the age of 16. The results for boys support the critical age model and imply that areas have no childhood exposure effects on boys: the outcomes of boys are unrelated to their age at the time of the move. This implies that the likelihood of boys to complete high school may be unaffected by the families' choices where to live, or boys are affected by the move to a new area at similar magnitude irrespective of the age at the time of the move. The estimation using data of all girls gives a less clear result, which might imply heterogeneity of exposure effects across parents' income levels. The results are robust to alternative specifications and to the overidentification test based on different birth cohorts.