Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/240332 
Year of Publication: 
2020
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 9/2020
Publisher: 
Bank of Finland, Helsinki
Abstract: 
In this paper we present Aino 3.0, the latest vintage of the dynamic stochastic general equilibrium (DSGE) model used at the Bank of Finland for policy analysis. Aino 3.0 is a small-open economy DSGE model at the intersection of the recent literatures on so-called TANK ('Two-Agent New Keynesian') and MONK ('Mortgages in New Keynesian') models. It aims at capturing the most relevant macro-financial linkages in the Finnish economy and provides a rich laboratory for the analysis of various macroeconomic and macroprudential policies. We show how the availability of a durable consumption good (housing), on the one hand, and the presence of credit-constrained households, on the other hand, affect the transmission of key macroeconomic and financial shocks. We also illustrate how these new transmission channels affect model dynamics compared to the previous model vintage (the Aino 2.0 model of Kilponen et al., 2016).
Subjects: 
business cycles
small open economy
credit constraints
housing market
long-term debt
JEL: 
E21
E32
E44
F41
R31
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-329-4
Document Type: 
Working Paper

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