Weak Economic Conditions and the Objective of the Government Programme

Abstract

The key economic objectives of the current Finnish government are valid only in normal international economic conditions. However, weaker than normal conditions have not been defined.

We propose to base such a definition on the expected negative deviation from the euro-area gdp path projected by a statistical model. This implies that the probability of weak economic conditions would be about 20 per cent.

Our simulations suggest that a negative deviation of international economic conditions from the normal conditions as defined by us would weaken GDP, employment and public finances in Finland significantly. The employment rate could end up even 2 percentage points smaller than in the baseline.

Information om publikationen

Serie
ETLA Muistio - ETLA Brief 86
Datum
06.03.2020
Nyckelord
Government programme, Employment objective, Normal economic conditions
ISSN
2323-2463
JEL
C11, E32, E37, E61
Sidor
11
Språk
Finska