Recent Trends in Income Inequality in Finland

Marja Riihelä, Risto Sullström, Ilpo Suoniemi and Matti Tuomala

No 106, Working Papers from Tampere University, Faculty of Management and Business, Economics

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.

Keywords: inequality; unemployment; income decomposition (search for similar items in EconPapers)
Pages: 33 pages
Date: 2001-11
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:tam:wpaper:0106

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