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Recent Trends in Income Inequality in Finland

Author

Listed:
  • Marja Riihelä
  • Risto Sullström
  • Ilpo Suoniemi
  • Matti Tuomala

    (School of Management, University of Tampere)

Abstract

The aim of this paper is to discuss the determinants of the U.S. dollar real exchange rate fluctuation. We focus our analysis on a nominal exchange rate effect on tradable prices. We explicitly consider the effects of profit maximizing foreign firms’ entry decisions on the domestic tradable prices through the supply changes after a large appreciation. If firms face sunk entry costs when breaking into foreign markets, the extent of pass-through will depend on the expected changes of nominal exchange rate. Typically, exchange rate uncertainty is determined as a volatility of continuos time series process. We enlarge the discussion to consider also possible jumps in the expected exchange rate time path. Finally, an interesting perspective is provided by a real option approach that emphasize dynamic supply effects through sunk costs and uncertainty.

Suggested Citation

  • Marja Riihelä & Risto Sullström & Ilpo Suoniemi & Matti Tuomala, 2001. "Recent Trends in Income Inequality in Finland," Working Papers 0106, Tampere University, Faculty of Management and Business, Economics.
    • Handle: RePEc:tam:wpaper:0106
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    File URL: http://urn.fi/urn:isbn:951-44-5254-2
    File Function: First version, 2001
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    Citations

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    Cited by:

    1. Olivier Bargain & Tim Callan, 2010. "Analysing the effects of tax-benefit reforms on income distribution: a decomposition approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(1), pages 1-21, March.
    2. Sutherland, Holly & Mantovani, Daniela, 2003. "Social indicators and other income statistics using the EUROMOD baseline: a comparison with Eurostat and National Statistics," EUROMOD Working Papers EM1/03, EUROMOD at the Institute for Social and Economic Research.

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