Devaluation risk in target zones: evidence from the Nordic countries

Article Abstract:

A target zone is defined as the range within which a currency basket index is confined. Assuming that devaluations are unique events which may be triggered by fundamentals, an econometric model of devaluations in target zone regimes is developed from empirical data on Norway, Denmark, Sweden and Finland for the period 1978-1987. The analysis reveals the influence of a correlation between the money stock, industrial production, foreign exchange reserves and the existing central parity on the probability and size of the devaluations.

Scandinavia, Currency devaluation, Devaluation (Currency)

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Pricing-to-market in Swedish exports

Article Abstract:

An investigation was conducted on fluctuations in prices of Swedish exports to five countries. Systematic differences between prices to different markets were tested to see if relative export prices were affected by macroeconomic conditions in destination countries. The results showed that deviations from no-pricing-to-market and neutrality were common and persistent. In addition, long-run monetary neutrality was rejected in almost half the cases taken from a sample over 15 years.

International trade, Sweden, Exports

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Political cycles and cyclical policies

Article Abstract:

A fiscal policy model is developed to determine how ideology, economic activity and elections affect government spending and revenue. Determinants of revenue and spending are identified using fiscal forecasts. Moreover, the model uses data on economic activity and fiscal forecasts for Sweden. Results show that revenue is positively correlated with nominal earnings while spending is negatively correlated with real gross domestic product.

Forecasts and trends, Government spending policy, Fiscal policy, Revenue

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