Financial markets in the BOF4 model of the Finnish economy

Juha Tarkka and Alpo Willman

No 1/1990, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: This paper describes the modelling of financial markets and the balance of payments in BOF4, a quarterly macroeconomic model developed by the Bank of Finland. The short-term interest rate is determined as a result of the interaction of the demand for money and money supply, as in the conventional IS-LM approach. Alternatively, the model may be solved under the assumption that monetary policy is based on pegging interest rates. In that case, the domestic credit of the Central Bank is the equilibrating variable.

Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp1990_001

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