Spillovers in the Nordic Countries

Borislava Mircheva and Dirk Muir

No 2015/070, IMF Working Papers from International Monetary Fund

Abstract: Denmark, Finland, Norway, and Sweden form a tightly integrated region which has strong ties with the euro area as well as some exposure to Russia. Using the IMF’s Global Integrated Monetary and Fiscal model (GIMF), we examine spillovers the region could face, focusing on possible scenarios from the rest of the euro area and Russia, and the fall in global oil prices. We show that the spillovers from these scenarios differ in magnitude and impact, regardless of the high degree of integration among the four Nordic economies. These differences are driven by the fact that Denmark and Finland have no independent monetary policy, and Denmark and Norway are net energy exporters while Finland and Sweden are energy importers. We infer lessons for policy from the outcomes.

Keywords: WP; real GDP; Finland; price; euro area; euro; Spillovers; monetary policy; fiscal policy; dynamic stochastic general equilibrium models; Nordic countries; area imports; real GDP trough; mainland real GDP; oil price drop; monetary policy response; demand share; Norway's mainland real GDP trough; demand share of the oil price decrease; investment demand; mainland real GDP trough; monetary policy in Denmark; GDP reduction; Energy pricing; Energy prices; Consumption; Oil prices; Sovereign wealth funds; Europe; Global (search for similar items in EconPapers)
Pages: 28
Date: 2015-03-27
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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