The Macroeconomic Effects of Fiscal Policy in a Small Open Economy under a Flexible Exchange Rate Regime

This licentiate's thesis analyzes the macroeconomic effects of fiscal policy in a small open economy under a flexible exchange rate regime, assuming that the government spends exclusively on domestically produced goods. The motivation for this research comes from the observation that the literature on the new open economy macroeconomics (NOEM) has focused almost exclusively on two-country global models and the analyses of the effects of fiscal policy on small economies are almost completely ignored. This thesis aims at filling in the gap in the NOEM literature and illustrates how the macroeconomic effects of fiscal policy in a small open economy depend on the specification of preferences. The research method is to present two theoretical model that are extensions to the model contained in the Appendix to Obstfeld and Rogoff (1995). The first model analyzes the macroeconomic effects of fiscal policy, making use of a model that exploits the idea of modelling private and government consumption as substitutes in private utility. The model offers intuitive predictions on how the effects of fiscal policy depend on the marginal rate of substitution between private and government consumption. The findings illustrate that the higher the substitutability between private and government consumption, (i) the bigger is the crowding out effect on private consumption (ii) and the smaller is the positive effect on output. The welfare analysis shows that the less fiscal policy decreases welfare the higher is the marginal rate of substitution between private and government consumption. The second model of this thesis studies how the macroeconomic effects of fiscal policy depend on the elasticity of substitution between traded and nontraded goods. This model reveals that this elasticity a key variable to explain the exchange rate, current account and output response to a permanent rise in government spending. Finally, the model demonstrates that temporary changes in government spending are an effective stabilization tool when used wisely and timely in response to undesired fluctuations in output. Undesired fluctuations in output can be perfectly offset by an opposite change in government spending without causing any side-effects.

The role of phosphorus as a regulator of bloom-forming diazotrophic cyanobacteria in the Baltic Sea

Eutrophication favours harmful algal blooms worldwide. The blooms cause toxic outbreaks and deteriorated recreational and aesthetic values, causing both economic loss and illness or death of humans and animals. The Baltic Sea is the world s only large brackish water habitat with recurrent blooms of toxic cyanobacteria capable of biological fixation of atmospheric nitrogen gas. Phosphorus is assumed to be the main limiting factor, along with temperature and light, for the growth of these cyanobacteria. This thesis evaluated the role of phosphorus nutrition as a regulating factor for the occurrence of nitrogen-fixing cyanobacteria blooms in the Baltic Sea, utilising experimental laboratory and field studies and surveys on varying spatial scales. Cellular phosphorus sources were found to be able to support substantial growth of the two main bloom forming species Aphanizomenon sp. and Nodularia spumigena. However, N. spumigena growth seemed independent of phosphorus source, whereas, Aphanizomenon sp. grew best in a phosphate enriched environment. Apparent discrepancies with field observations and experiments are explained by the typical seasonal temperature dependent development of Aphanizomenon sp. and N. spumigena biomass allowing the two species to store ambient pre-bloom excess phosphorus in different ways. Field experiments revealed natural cyanobacteria bloom communities to be predominantly phosphorus deficient during blooms. Phosphate additions were found to increase the accumulation of phosphorus relatively most in the planktonic size fraction dominated by the nitrogen-fixing cyanobacteria. Aphanizomenon sp. responded to phosphate additions whereas the phosphorus nutritive status of N. spumigena seemed independent of phosphate addition. The seasonal development of phosphorus deficiency is different for the two species with N. spumigena showing indications of phosphorus deficiency during a longer time period in the open sea. Coastal upwelling introduces phosphorus to the surface layer during nutrient deficient conditions in summer. The species-specific ability of Aphanizomenon sp. and N. spumigena to utilise phosphate enrichment of the surface layer caused by coastal upwelling was clarified. Typical bloom time vertical distributions of biomass maxima were found to render N. spumigena more susceptible to advection by surface currents caused by coastal upwellings. Aphanizomenon sp. populations residing in the seasonal thermocline were observed to be able to utilise the phosphate enrichment and a bloom was produced with a two to three week time lag subsequent to the relaxation of upwelling. Consistent high concentrations of dissolved inorganic phosphorus, caused by persistent internal loading of phosphorus, was found to be the main source of phosphorus for large-scale pelagic blooms. External loads were estimated to contribute with only a fraction of available phosphorus for open sea blooms. Remineralization of organic forms of phosphorus along with vertical mixing to the permanent halocline during winter set the level of available phosphorus for the next growth season. Events such as upwelling are important in replenishing phosphate concentrations during the nutrient deplete growth season. Autecological characteristics of the two main bloom forming species favour Aphanizomenon sp. populations in utilising the abundant excess phosphate concentrations and phosphate pulses mediated through upwelling. Whilst, N. spumigena displays predominant phosphorus limited growth mode and relies on more scarce cellular phosphorus stores and presumably dissolved organic phosphorus compounds for growth. The Baltic Sea is hypothesised to be in an inhibited state of recovery due to the extensive historical external nutrient loading, extensive internal phosphorus loading and the substantial nitrogen load caused by cyanobacteria nitrogen fixation. This state of the sea is characterised as a vicious circle .

Studies of the star-forming structures in the dense interstellar medium: a view by dust extinction

New stars in galaxies form in dense, molecular clouds of the interstellar medium. Measuring how the mass is distributed in these clouds is of crucial importance for the current theories of star formation. This is because several open issues in them, such as the strength of different mechanism regulating star formation and the origin of stellar masses, can be addressed using detailed information on the cloud structure. Unfortunately, quantifying the mass distribution in molecular clouds accurately over a wide spatial and dynamical range is a fundamental problem in the modern astrophysics. This thesis presents studies examining the structure of dense molecular clouds and the distribution of mass in them, with the emphasis on nearby clouds that are sites of low-mass star formation. In particular, this thesis concentrates on investigating the mass distributions using the near infrared dust extinction mapping technique. In this technique, the gas column densities towards molecular clouds are determined by examining radiation from the stars that shine through the clouds. In addition, the thesis examines the feasibility of using a similar technique to derive the masses of molecular clouds in nearby external galaxies. The papers presented in this thesis demonstrate how the near infrared dust extinction mapping technique can be used to extract detailed information on the mass distribution in nearby molecular clouds. Furthermore, such information is used to examine characteristics crucial for the star formation in the clouds. Regarding the use of extinction mapping technique in nearby galaxies, the papers of this thesis show that deriving the masses of molecular clouds using the technique suffers from strong biases. However, it is shown that some structural properties can still be examined with the technique.

Pelon ja toivon välissä : Pätkätyöläisen urakerronta

This study analyzes the forming of the occupational identity of the well-educated fixed-term employees. Fixed-term employment contracts amongst the well-educated labour force are exceptionally common in Finland as compared to other European countries. Two groups of modern fixed-term employees are distinguished. The first comprises well-educated women employed in the public sector whose fixed-term employment often consists of successive periods as temporary substitutes. The other group comprises well-educated, upper white-collar men aged over 40, whose fixed-term employment careers often consist of jobs of project nature or posts that are filled for a fixed period only. Method of the study For the empirical data I interviewed 35 persons (26 women and 9 men) in 33 interviews, one of which was conducted by e-mail and one was a group interview. All the interviews were electronically recorded and coded. All the interviewees have two things in common: fixed-term employment and formal high education. Thirteen (13) of them are researchers, four nurses, four midwives, four journalists, and ten project experts. I used the snowball method to get in touch the interviewees. The first interviewees were those who were recommended by the trade unions and by my personal acquaintances. These interviewees, in turn, recommended other potential interviewees. In addition, announcements on the internet pages of the trade unions were used to reach other interviewees. In analysing process I read the research material several times to find the turning points in the narrative the interviewees told. I also searched for the most meaningful stories told and the meaning the interviewees gave to these stories and to the whole narrative. In addition to that I paid attention to co-production of the narrative with the interviewees and analyzed the narrative as performance to be able to search for the preferred identities the interviewees perform. (Riesman 2001, 698-701). I do not pay much attention to the question of truth of a narrative in the sense of its correspondence with facts; rather I think a working life narrative has two tasks: On the one hand one has to tell the facts and on the other hand, he/she has to describe the meaning of these facts to herself/himself. To emphasize the double nature of the narrative about one’s working life I analyzed the empirical data both by categorizing it according to the cultural models of storytelling (heroic story, comedy, irony and tragedy) and by studying the themes most of the interviewees talked about. Ethics of the study I chose to use narrative within qualitative interviews on the grounds that in my opinion is more ethical and more empowering than the more traditional structured interview methods. During the research process I carefully followed the ethical rules of a qualitative research. The purpose of the interviews and the research was told to the interviewees by giving them a written description of the study. Oral permission to use the interview in this research was obtained from the interviewees. The names and places, which are mentioned in the study, are changed to conceal the actual identity of the interviewees. I shared the analysis with the interviewees by sending each of them the first analysis of their personal interview. This way I asked them to make sure that the identity was hidden well enough and hoped to give interviewees a chance to look at their narratives, to instigate new actions and sustain the present one (Smith 2001, 721). Also I hoped to enjoy a new possibility of joint authorship. Main results As a result of the study I introduce six models of telling a story. The four typical western cultural models that guide the telling are: heroic story, comedy, tragedy and satirical story (Hänninen 1999). In addition to these models I found two ways of telling a career filled with fixed-term employments that differ significantly from traditional career story telling. However, the story models in which the interviewees pour their experience locates the fixed term employers work career in an imagined life trajectory and reveals the meaning they give to it. I analyze the many sided heroic story that Liisa tells as an example of the strength of the fear of failing or losing the job the fixed term employee feels. By this structure it is also possible to show that success is felt to be entirely a matter of chance. Tragedy, the failure in one’s trial to get something, is a model I introduce with the help of Vilppu’s story. This narrative gets its meaning both from the sorrow of the failure in the past and the rise of something new the teller has found. Aino tells her story as a comedy. By introducing her narrative, I suggest that the purpose of the comedy, a stronger social consensus, gets deeper and darker shade by fixed-term employment: one who works as a fixed term employee has to take his/her place in his/her work community by him/herself without the support the community gives to those in permanent position. By studying the satiric model Rauno uses, I argue that using irony both turns the power structures to a carnival and builds free space to the teller of the story and to the listener. Irony also helps in building a consensus, mutual understanding, between the teller and the listener and it shows the distance the teller tells to exist between him and others. Irony, however, demands some kind of success in one’s occupational career but also at least a minor disappointment in the progress of it. Helmi tells her story merely as a detective story. By introducing Helmi’s narrative, I argue that this story model strengthens the trust in fairness of the society the teller and the listener share. The analysis also emphasizes the central position of identity work, which is caused by fixed-term employment. Most of the interviewees talked about getting along in working life. I introduced Sari’s narrative as an example of this. In both of these latter narratives one’s personal character and habits are lifted as permanent parts of the actual professional expertise, which in turn varies according to different situations. By introducing these models, I reveal that the fixed-term employees have different strategies to cope with their job situations and these strategies vary according to their personal motives and situations and the actual purpose of the interview. However, I argue that they feel the space between their hopes and fears narrow and unsecure. In the research report I also introduce pieces of the stories – themes – that the interviewees use to build these survival strategies. They use their personal curriculum vitae or portfolio, their position in work community and their work morals to build their professional identity. Professional identity is flexible and varies in time and place, but even then it offers a tool to fix one’s identity work into something. It offers a viewpoint to society and a tool to measure one’s position in surrounding social nets. As one result of the study I analyze the position the fixed-term employees share on the edge of their job communities. I summarize the hopes and fears the interviewees have concerning employers, trade unions, educational institutions and the whole society. In their opinion, the solidarity between people has been weakened by the short-sighted power of the economy. The impact the fixed-term employment has on one’s professional identity and social capital is a many-sided and versatile process. Fixed-term employment both strengthens and weakens the professional identity, social capital and the building of trust. Fixed-term employment also affects one’s day-to-day life by excluding her/him from the norm and by one’s difficulty in making long-term plans (Jokinen 2005). Regardless of the nature of the job contract, the workers themselves are experts in making the best of their sometimes less than satisfying work life and they also build their professional identity by using creatively their education, work experiences and interpersonal relations. However, a long career of short fixed-term employments may seriously change the perception of employee about his/her role. He/she may start concentrating only in coping in his/her unsatisfactory situation and leaves the active improvement of the lousy working conditions to other people. Keywords: narrative, fixed-tem employment, occupational identity, work, story model, social capital, career  

Storage and retrieval of individual genomes

A repetitive sequence collection is one where portions of a base sequence of length n are repeated many times with small variations, forming a collection of total length N. Examples of such collections are version control data and genome sequences of individuals, where the differences can be expressed by lists of basic edit operations. Flexible and efficient data analysis on a such typically huge collection is plausible using suffix trees. However, suffix tree occupies O(N log N) bits, which very soon inhibits in-memory analyses. Recent advances in full-text self-indexing reduce the space of suffix tree to O(N log σ) bits, where σ is the alphabet size. In practice, the space reduction is more than 10-fold, for example on suffix tree of Human Genome. However, this reduction factor remains constant when more sequences are added to the collection. We develop a new family of self-indexes suited for the repetitive sequence collection setting. Their expected space requirement depends only on the length n of the base sequence and the number s of variations in its repeated copies. That is, the space reduction factor is no longer constant, but depends on N / n. We believe the structures developed in this work will provide a fundamental basis for storage and retrieval of individual genomes as they become available due to rapid progress in the sequencing technologies.

Flexible Budgeting under Uncertainty: A Real Options Perspective

This paper examines the relationships between uncertainty and the perceived usefulness of traditional annual budgets versus flexible budgets in 95 Swedish companies. We form hypotheses that the perceived usefulness of the annual budgets as well as the attitudes to more flexible budget alternatives are influenced by the uncertainty that the companies face. Our study distinguishes between two separate kinds of uncertainty: exogenous stochastic uncertainty (deriving from the firm’s environment) and endogenous deterministic uncertainty (caused by the strategic choices made by the firm itself). Based on a structural equations modelling analysis of data from a mail survey we found that the more accentuated exogenous uncertainty a company faces, the more accentuated is the expected trend towards flexibility in the budget system, and vice versa; the more endogenous uncertainty they face, the more negative are their attitudes towards budget flexibility. We also found that these relationships were not present with regard to the attitudes towards the usefulness of the annual budget. Noteworthy is, however, that there was a significant negative relationship between the perceived usefulness of the annual budget and budget flexibility. Thus, our results seem to indicate that the degree of flexibility in the budget system is influenced by both general attitudes towards the usefulness of traditional budgets and by the actual degree of exogenous uncertainty a company faces and by the strategy that it executes.