Browsing by master's degree program "Taloustieteen maisteriohjelma"

In this thesis, a conditional BVARX forecasting model for short and medium term economic forecasting is developed. The model is especially designed for small-open economies and its performance on forecasting several Finnish economic variables is assessed. Particular attention is directed to the hyperparameter choice of the model. A novel algorithm for hyperparameter choice is proposed and it is shown to outperform the marginal likelihood based approach often encountered in the literature. Other prominent features of the model include conditioning on predictive densities and exogeneity of the global economic variables. The model is shown to outperform univariate benchmark models in terms of forecasting accuracy for forecasting horizons up to eight quarters ahead.

I study whether modest copayment increases affect the general practitioner (GP) use in Finland, a country with relatively low copayments, low inequality, and an extensive welfare state. I also examine whether the estimates are driven by certain low–income groups considered to be economically vulnerable. The Finnish Government allowed municipalities to increase copayments in 2015 and 2016 by 9.5% and 27.5% respectively. At maximum, this meant that the copayment for a GP visit was 20.90 euros at the beginning of 2016, approximately 40% higher than at the end of 2014. Almost all municipalities made the 9.5% increase at the start of 2015, but some of them decided not to make the 27.5% increase at all or made smaller increases. I exploit this variation by estimating two–way fixed effects regression models, and I use population–wide administrative data containing all primary healthcare visits in 2013–2018 and socioeconomic information on patients. In the models, copayment increases are negatively associated with both GP use and median waiting times. Based on the means of estimates from several specifications, the 27.5% increase alone is associated with a 2% decrease in visits per resident in the first four quarters after the change and a 6% decrease thereafter. The estimates are not statistically significant. The median waiting times decrease by two days in the first year after the change and five days thereafter, and these results are significant. When I estimate the effects of both increases, the means of estimates are now a 5% decrease in visits per resident in the first four quarters after the last increase and an 8% decrease thereafter. Some of the estimates are statistically significant. I find no evidence to support the hypothesis that the low–income groups were more sensitive to the increases. However, the confidence intervals are wide across the study, suggesting that the design may be underpowered to detect small effects from zero. Moreover, the point estimates are surprisingly far from zero, which is especially surprising when upper income quintiles are concerned. Therefore, more evidence is needed to be able to make firm conclusions about the causal effects of policy changes.

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.

Conflict-related violence and fragility are among the core development challenges of our time. Over the past decades, most armed conflicts have comprised one or more non-state actors, and conflicts commonly arise among domestic actors. These non-state actors cannot resort to conscript armies and thus need to motivate citizens to join their ranks. Due to this, addressing individual participation motivations is an integral part of the study of conflict. Armed conflict participation is puzzling because it comes with significant risks. In contrast, the possible benefits of conflict outcomes are often public and non-excludable goods, making conflict participation subject to a free rider problem. This thesis provides a narrative literature review of individual participation motivations in the presence of the free rider problem. The focus is on situations where individuals are not conscripts, and the armed groups cannot mobilise an existing reserve of combatants. The existing economic literature has addressed individual-level conflict participation motivations relatively little. This thesis assesses different motivational factors’ ability to solve the free rider problem and seeks to inspire future research. Both theoretical and empirical literature is covered. This thesis addresses three motivational factors: (1) material incentives and the opportunity cost of participation; (2) grievances and socio-emotional incentives; and (3) negative incentives, particularly forced participation and the cost of non-action. This thesis does not seek to determine which motivation provides the best explanation. Instead, the logic behind each motivational factor is illustrated, and their ability to solve the free rider problem is critically evaluated. This thesis concludes that each motivational factor can help solve the free rider problem, but relying on a single motivation is often insufficient. This thesis recommends that economists look beyond material incentives and account for various motivations. Complementing material incentives with socio-emotional and negative incentives, in particular, gives a fuller picture of why individuals are willing to participate and risk their lives in conflict activities. However, further empirical research is needed to identify and test the abovementioned motivations.

Earnings insurance is a measure of how much earnings of a worker change relative to idiosyncratic shock to firm performance. In case of full earnings insurance, shocks are not passed onto earnings at all and otherwise earnings insurance is partial. Linked employer-employee data is widely used in this recent empirical research interest due to its rich nature. This paper explores earnings insurance in Finland by focusing on three aspects: how much firms in Finland provide earnings insurance, are there differences in levels of earnings insurance between industries and whether partial earnings insurance is driven by hours worked or hourly wage. The main findings are that firms in Finland provide partial but substantial earnings insurance in all industries and that hours worked play a smaller role than hourly wage in determining partial earnings insurance. Because data on hours worked is not available in many countries, this paper is able to bring new insight on the role of hours worked and hourly wage in the composition of partial earnings insurance. However, hours worked and hourly wage explain only around half of partial earnings insurance, so the result should be considered with caution.

Kuolevuus on viime vuosikymmeninä alentunut merkittävästi. Eläkejärjestelmän näkökulmasta elinajan piteneminen asettaa maksunnousupaineita, sillä eläkettä maksetaan pidemmäksi ajaksi kuin mihin oli varauduttu. Tästä syystä vuoden 2005 eläkeuudistuksessa otettiin käyttöön uusi sopeutumismekanismi, elinaikakerroin. Sen tarkoitus on sopeuttaa alkavien eläkkeiden määrä elinajanodotteen muutokseen. Lisäksi vuoden 2017 eläkeuudistuksessa on päätetty nostaa alinta eläkeikää asteittain 63 vuodesta 65 vuoteen kolmen kuukauden vuosivauhtia vuoteen 2027 asti. Sen jälkeen alimman eläkeiän nousu sidotaan elinajan odotteeseen. Edellä kuvattu kokonaisuus on edunsaajalle haastava ja elinaikakerrointa on julkisuudessa usein kuvattu ’eläkeleikkurina’. Tässä työssä elinaikakertoimen ja eliniän noston yhteisvaikutukset on kuvattu selkeästi. Muutosten tarpeellisuus on osoitettu skenaariolaskelmilla asteittain niin, että kunkin toimenpiteen vaikutus on eritelty sekä eläkejärjestelmän että vakuutetun näkökulmasta. Toimenpiteiden vaikutusten arviointiin on käytetty kahta kirjallisuudessa vakiintunutta mikrotalouden käsitettä: aktuaarinen reiluus ja aktuaarinen neutraalisuus. Tässä työssä ei arvioida edellä mainittujen käsitteiden arvoja absoluuttisina, vaan pikemminkin tarkastellaan niiden muutoksia eri sopeutusmekanismien tullessa voimaan. Laskelmissa arvioidaan myös vuoden 2005 eläkeuudistuksessa voimaan tulleen lykkäyskertoimen kannustavuutta. Arvio on toteutettu kahdella skenaariolla: ensinnä, kun työskentely jatkuu työeläkeotteella ilmoitettuun tavoite-eläkeikään asti ja toiseksi tilanteessa, jossa työskentely jatkuu yhden vuoden ajan alimman eläkeiän täyttymisen jälkeen. Laskelmista nähdään, että molempien sopeutumismekanismien voimaantulo on ollut välttämätöntä, jotta vakuutusmaksun korotuksen tarve ei olisi noussut kohtuuttomasti. Lisäksi vakuutetun näkökulmasta sekä elinaikakertoimen että alimman eläkeiän nosto kohdistuvat edunsaajille eikä tuleville vakuutetuille, kuten olisi käynyt mikäli vakuutusmaksua olisi nostettu. Kannustavuuden näkökulmasta tulokset ovat mielenkiintoisia. Työskentely tavoite-eläkeikään asti on toimeentulon näkökulmasta kannattavaa. Eläkejärjestelmän näkökulmasta se pidentää työuria ja lyhentää eläkeuria, näin ollen maksutulo kasvaa ja eläkevarallisuudet pienenevät. Vakuutetun näkökulmasta taas elinaikakertoimen pienentävä vaikutus eläkemäärässä kumoutuu lykkäyskorotuksen ansiosta täysin, ja lisäksi eläke kasvaa lisävuosien osalta myös tavallisella karttumalla. Mekanismi on siis näiltä osin toimiva. Yhden vuoden lisätyöskentelyn kannustavuus riippuu monista tekijöistä: odotetusta elinajasta, jo karttuneesta eläkkeestä ja jopa lykkäysvuoden eläkeindeksistä. Tämän tarkastelun perusteella on vaikea osoittaa, että mekanismi olisi kaikille ikä- tai tuloluokille täysin toimiva. Laskelmien tulosten perusteella nähdään, että vuoden 2005 ja 2017 eläkeuudistuksissa luoduilla sopeutumis-mekanismeilla on merkittävä rooli maksutason hillitsemisessä elinajan pidentyessä. Lisäksi tuloksista huomataan, että sopeutusmekanismeja on tutkittava eri mittareilla, jotta havaitaan niiden kokonaisuusvaikutukset eri tilanteissa. Aktuaarinen reiluus ja erityisesti aktuaarinen neutraalisuus ovat tämän tutkimuksen perusteella osoittautuneet varteenotettaviksi käsitteiksi tähän tarkoitukseen.

It has lately become a common practice among national authorities with macroeconomic mandates to build large Dynamic Stochastic General Equilibrium (DSGE) models to assist in forecasting and policy analysis. The Finnish Ministry of Finance has also developed a small open economy New Keynesian DSGE model, “KOOMA”. As DSGE models try to emulate the key features and dynamics of the economy, the crucial question is, how well do they function in accordance with reality? An answer to this question can be searched by using Structural Vector Autoregression (SVAR) models, which are natural econometric counterparts to DSGE models and are better suited for analyzing data. The aim of this study is to evaluate the calibration of KOOMA with a SVAR model, which is identified with sign restrictions. I compare impulse response functions from the SVAR model, which are found both statistically significant and robust to changes in model specifications, to the equivalent impulse response functions from KOOMA. The findings suggest, that KOOMA generally produce impulse responses with same signs as the SVAR model, but there are some differences in the magnitudes and persistence of the responses.

The linkage between the import prices and the exchange rate is an important topic in the open economy macroeconomics. However, there is a few literature focusing on the elasticity of the import prices with respect to the exchange rate especially in Finland. The aim of this study is to estimate the Exchange Rate Pass-through (ERPT) on the aggregated Finnish import prices. With the time series of Finnish Import Price Index, the aggregated foreign Producer Price Index and the aggregated foreign exchange rate index from 2001 to 2017, the analysis suggests the short-term ERPT on Finnish import prices is 36.3% and the long-term ERPT is 70.7%. Finland’s domestic demand has little impact on the short-term ERPT on Finnish import prices, while it likely reduces ERPT by 1 to 5 percentage points in long term.

Tässä tutkielmassa käsittelen finanssisyklien säännönmukaisuuksia ja selvitän niiden paikkansapitävyyttä Suomessa. Finanssisyklit ovat makrotaloustieteen tutkimuskohde, joka on läheistä sukua reaalitalouden muuttujiin keskittyvälle suhdannesyklien tutkimukselle. Finanssisyklit muotoutuivat tutkimusaiheeksi vuosien 2007–2009 finanssikriisin jälkeen, kun rahoitusmarkkinoiden ylikuumentumisia ja romahduksia ruvettiin tutkimuksissa tarkastelemaan syklisenä liikkeenä. Finanssisyklien säännönmukaisuuksia, eli niin kutsuttuja tyyliteltyjä faktoja, voidaan käyttää makrotaloustieteen mallien muotoilemiseen. Kirjallisuudessa finanssisyklit identifioidaan yleisimmin luottokantojen, asuntojen hintojen ja asuinkiinteistöjen hintojen avulla. Näistä tunnistettujen syklien ominaisuuksia verrataan usein BKT:n sykleihin. Tutkielmassani tarkastelen Suomen luottokannan, asuntojen hintojen ja BKT:n syklejä ajanjakson 1970Q4–2020Q3 kattavalla neljännesvuosiaineistolla. Lisäksi tutkin Suomen lainakannan, asuntojen hintojen ja BKT:n syklejä ajanjakson 1905–2017 kattavalla vuosiaineistolla. Käytän analyysissäni käännekohtamenetelmää, havaitsemattomien komponenttien malleja ja CF-suodatinta. Käyttämäni menetelmät ja aineistot antavat yhdenmukaisen kuvan siitä, että Suomen luotto- ja lainakannoissa, asuntojen hinnoissa sekä BKT:ssa on 8–20 vuoden mittaisia keskipitkän aikavälin syklejä, jotka liikkuvat ajallisesti tarkasteltuna läheisesti yhdessä. Tuloksieni mukaan luotto- ja lainakantojen sekä asuntojen hintojen syklien värähdyslaajuus on BKT:n syklejä suurempaa. Tuloksistani on myös havaittavissa, että luotto- ja lainakantojen sekä asuntojen hintojen syklien huipuilla on taipumusta ajoittua finanssikriiseihin sekä muihin epävakaisiin ajanjaksoihin rahoitusmarkkinoilla. Tulokseni vastaavat kirjallisuudessa vallitsevia käsityksiä finanssisyklien tyylitellyistä faktoista kehittyneissä maissa. Tutkimukset eivät ole yksimielisiä siitä, onko finanssisyklien pituus ja värähdyslaajuus kasvanut vuoden 1985 jälkeen. Tutkielmassani arvioin tutkimushypoteesia CF-suodattimen ja havaitsemattomien komponenttien mallien avulla. Saamani tulokset viittaavat siihen, että Suomen lainakannan ja asuntojen hintojen syklit ovat olleet vuoden 1985 jälkeen pidempiä kuin vuosina 1950–1984, mutta ainoastaan lainakannan syklien värähdyslaajuus on kasvanut. Uudemmissa tutkimuksissa on tutkittu vähemmän sitä, kestävätkö finanssisyklien noususuhdanteet keskimäärin pidempään kuin laskusuhdanteet, ja onko tämä epäsymmetrisyys suurempaa kuin BKT:n sykleillä. Käsittelemäni tutkimuksen sekä käännekohtamenetelmällä saamieni tuloksien mukaan finanssisyklien noususuhdanteet kestävät laskusuhdanteita pidempään, mutta tämä epäsymmetrisyys ei ole suurempaa kuin BKT:n sykleillä.