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International capital flows, deregulation and the offset coefficient in Finland 1975-1990

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  • Hämäläinen, Timo
  • Kovanen, Arto

Abstract

This study examines, using variable-parameter regression, how the offset coefficient in the capital flow equation for Finland has changed over time. We found the constant parameter estimate of the offset coefficient to be stable and quite large. Instead, the interest rate sensitivity has increased due to the liberalization, i.e. international capital flows have become very sensitive to the interest rate differential. We also examined how international capital flows are affected by exchange rate speculations.

Suggested Citation

  • Hämäläinen, Timo & Kovanen, Arto, 1991. "International capital flows, deregulation and the offset coefficient in Finland 1975-1990," Bank of Finland Research Discussion Papers 7/1991, Bank of Finland.
    • Handle: RePEc:zbw:bofrdp:rdp1991_007
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    References listed on IDEAS

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    1. Svensson, Lars E. O., 1991. "Target zones and interest rate variability," Journal of International Economics, Elsevier, vol. 31(1-2), pages 27-54, August.
    2. Paul R. Krugman, 1988. "Target Zones and Exchange Rate Dynamics," NBER Working Papers 2481, National Bureau of Economic Research, Inc.
    3. Kouri, Pentti J K & Porter, Michael G, 1974. "International Capital Flows and Portfolio Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 443-467, May/June.
    4. Urvas, Antti, 1991. "Volatile exchange rates and speculation : can the dollar movements of the 1980s be explained?," Research Discussion Papers 2/1991, Bank of Finland.
    5. Saarenheimo, Tuomas, 1991. "Rahoitusvirtamallit ja kotitalouksien portfoliovalinta," Research Discussion Papers 5/1991, Bank of Finland.
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