Etla » Growth, structures, cycles

The future direction of the EU after the economic crisis

Timo Nikinmaa — Fri, 17 May 2013 10:06:54 +0000

The research project focuses on EU’s future direction after the economic crisis. The study will evaluate EU’s development trends and their implications for the EU and Finland. The research project seeks to support political decision-making as well as public debate.

The project is carried out by the Research Institute of the Finnish Economy (ETLA) and the Finnish Institute of International Affairs (FIIA) and researchers from both organisations will take part in the project. The study will be finished by the summer of 2014. The project is financed by the Jane and Aatos Erkko Foundation and is led by Research Director Markku Kotilainen (ETLA) and Director Teija Tiilikainen (FIIA)

For further information:

Markku Kotilainen (ETLA), markku.kotilainen@etla.fi

Teija Tiilikainen (FIIA), teija.tiilikainen@fiia.fi

Possibilities of the Russian Market for the Finnish Economy

Timo Nikinmaa — Fri, 17 May 2013 07:13:27 +0000

The objective of the project is to study the importance of the Russian demand potential for the Finnish economy. ETLA has carried out similar projects in 1986 and in 2003. We have also participated in 2005-2007 in a large research program financed by The Finnish Research Council with a theme “Opening of the Russian Economy”.

Our current project aims to update the previous research reports and to take up new relevant themes. Many changes have happened in Russia as well as in Finland since then. Russia has joined the WTO, its income level has increased and its production structure has changed. Also in Finland the production structure and the supply potential have changed. Our aim is to study possibilities provided by the changing circumstances for mutual economic cooperation and specialization in the spheres of foreign trade, tourism and foreign direct investment.

The leader of the project is Research Director Markku Kotilainen. The project will be carried out in 2013-2014. The project is financed by the TT Foundation.

The economic impacts of EU climate policy until 2020

admin — Tue, 09 Oct 2012 11:48:05 +0000

The macroeconomic impacts of EU climate policy implemented by the emission trading system in the third emission trading period 2013-2020 are evaluated by model simulations. The main purpose of the study is to compare the macroeconomic impacts of EU climate policy on the Finnish and the EU economies.

Modelling the demand for electricity is crucial for the analysis of the economic impacts of climate policy since electricity production is responsible for the vast majority of the carbon dioxide emissions of the EU emission trading sector. Air temperature influences the consumption of electricity in addition to the economic determinants of electricity demand. One aim of the study is to include both of these main determinants of electricity consumption in the econometric demand model of electricity. This will be done by estimating the electricity demand function from a panel data of EU countries. Likewise, EU panel data is used to estimate the price elasticity of the demand for electricity.

The price elasticity of the demand for electricity is crucial for the macroeconomic impacts of climate policy. If the price elasticity is very high, most of the adjustment to decreasing emission allowances takes place through decreasing electricity consumption. If the price elasticity of the demand for electricity is very low, most of the adjustment to climate policy takes place through decreasing economic activity.

The macroeconomic impacts of EU climate policy are analysed by simulations of the macroeconomic model of the EU economy and the Finnish economy. The main result of the simulations is that the reduction of the emission allowances of the EU emission trading sector in 2013-2020 will have more negative impacts in the Finnish economy than elsewhere in the EU area. The main reasons for this are the cold climate in Finland, the openness of the Finnish economy and the energy intensity of the Finnish industry.

A special issue in the macroeconomic analysis of climate policy is the impact of the shutdown of nuclear power plants in Germany by 2022. It turns out that the macroeconomic consequences of this decision will be more severe in Finland than in the rest of the EU area.

Researcher: Research Advisor Dr. Olavi Rantala.

Profitability of Finnish Passenger Ship Traffic

admin — Tue, 09 Oct 2012 10:54:53 +0000

The study will analyze the profitability of the Finnish passenger ship traffic in the coming years. The Finnish passenger ship traffic will face several challenges: 1) potential cuts in subsidies, 2) the EU sulphur emission decision of the EU, 3) possible introduction of value-added tax for the services provided in the passenger ships, 4) possible end of snuff sales in the ships operating under the Finnish flag, 5) possible change in the weight-water regulations. All these changes can substantially affect the profitability of the passenger ship traffic operating from Finland. The methods used: profitability calculations using different assumptions, as well as econometric studies on the effects of the VAT on the use of services in the ships.

Financing: Finnish Shipowners’ Association.

Researchers: Research Director Markku Kotilainen, Researcher Reijo Mankinen, Research Advisor Olavi Rantala

Possible Free Trade Agreement between the EU and the USA – the Effects for the Finnish Economy

admin — Tue, 09 Oct 2012 10:52:06 +0000

The aim of the study is research the effects of a possible free trade agreement between the EU and the USA for the Finnish economy. We use previous model based studies as a starting point for the evaluation of the effects. Then, we will send a questionnaire to companies that are active in Finnish-USA economic relations – especially in terms of foreign trade and investment. We will ask the firms about the benefits and costs of the possible agreement. In addition to firm level effects (received from the questionnaire) we will also briefly cover macroeconomic output and employment effects.

Financing: Ministry for Foreign Affairs.

Researchers: Researcher Ville Kaitila and Research Director Markku Kotilainen.

Prospects of Goods and Person Traffic between Finland and Russia until 2030

admin — Tue, 09 Oct 2012 10:50:09 +0000

We participate in a research consortium, the aim of which is to study the prospects of goods and person traffic between Finland and Russia until 2030. The consortium is led by VTT (Technical Research Centre of Finland). ETLAs contribution in the project will be to prepare the macroeconomic and sectoral scenarios that work as inputs for the traffic forecasts and scenarios. We produce a baseline forecast for the world economy, and especially for Finland and Russia. In addition to that, we construct four alternative scenarios, where the variables are: the price of energy and technical development in Russia (productivity growth). When preparing these scenarios, we use the world economy model NiGEM. The model produces five consistent scenarios for the world economy and for individual countries. For each macro scenario, we will produce sectoral scenarios, which work as inputs in the traffic models. The goods traffic model Frisbee (used by SITO consulting firm) will then optimize the transport vehicle and the routes used.

Financing: Ministry for Traffic and Communication.

Researchers: Researcher Paavo Suni, Research Advisor Olavi Rantala and Research Director Markku Kotilainen

Structural Performance of the EU Economies

admin — Tue, 09 Oct 2012 10:47:22 +0000

We participate in an international consortium, led by Ecorys Netherlands that has a framework agreement with the DG ECFIN of the European Commission. The focus of the agreement is the structural performance of the EU economies. At the moment there are two projects under preparation inside this framework. One of them is a follow up project of measures affecting the operating environment of small and medium-sized enterprises (SMEs). The main reference in the project is the fulfillment of the Small Business Act of the EU. The other project concerns the internationalization of the SMEs and the institutions that promote that in each country. Previously, we have studied, among others, the operation of the food stuff chain in the EU as well as foreign trade of food stuffs.

Researchers: Research Director Markku Kotilainen, Researchers Birgitta Berg-Andersson and Hannu Kaseva.