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Mick Silver
Unit value export and import indices compiled from returns to customs authorities are often used as surrogates for price indices in the measurement of inflation transmission, terms of trade (effects), and to deflate import and export value series to derive volume series. Their widespread use is mainly due to their relatively low cost compared with establishment price surveys. This paper provides evidence of substantial bias in their representation of such price changes. Their continued use would mislead economic analysis. The paper considers the efficacy of alternative strategies for their improvement, and argues for a move to establishment-based price surveys.
International Monetary Fund

This Selected Issues paper reviews some features of the labor market in Finland during the 1990s. In particular, it reviews patterns of employment and wage distribution across sectors. The paper describes the main regulatory features and formal structure of labor market arrangements: the wage negotiation process, employment legislation, income replacement regulations for the unemployed, and the recent changes in these areas introduced by the government. The paper also describes the structure of labor taxation, and reviews the theory and existing empirical evidence concerning the effects of taxation on labor market outcomes.

Mr. Tarhan Feyzioglu
An equilibrium exchange rate is here defined as the level that is consistent with simultaneous internal and external balances as specified in Montiel (1996). Exogenous “fundamental” variables determining these balances are identified. Along the lines of Edwards (1994), a reduced form is estimated with the cointegration technique for Finland for the period 1975-95. The estimation produced a reasonable set of equilibrium exchange rates that appreciate with positive shocks to the terms of trade, world real interest rates, and the productivity differential between Finland and its trading partners.
International Monetary Fund
This Selected Issues paper and Statistical Appendix examines inflation and wage dynamics in Finland. The paper discusses the data set used (quarterly data covering from 1975 to 1995) and the statistical properties of the relevant time series. It presents the model and the empirical estimates, and provides an outlook for consumer price index and nominal wage inflation for 1996:Q1–2001:Q4. The paper examines the determinants of the equilibrium real exchange rate, and also analyzes the Finnish banking system and the credit crunch hypothesis.
International Monetary Fund. Research Dept.
This paper examines the conditions under which the monetary authorities of a large industrial country can influence the exchange rate while keeping the growth rate of the money stock on a predetermined target. Monetary policy in the large industrial countries has in recent years focused primarily on the achievement of predetermined growth rates for monetary aggregates. This study treats such intervention as an example of a broader class of combination policies that, for convenience, may be called “sterilized policies.” In order to determine whether sterilized policies may be expected to be effective, this study examines the role of several specific types of monetary policy instrument in the context of a portfolio-balance model of financial markets. Each of the major countries employs a unique combination of policy instruments, ranging from market-oriented systems largely free of regulation to systems that rely heavily on quantitative ceilings and regulated interest rates. It is shown that sterilized changes in at least three of these instruments, as well as exchange market intervention, will have predictable effects on the exchange rate. The potentially effective instruments are reserve requirements on nonresident deposits or on deposits that are included in the targeted monetary aggregate, and controls on interest rates that are payable on such deposits.