Essays on macroeconomic effects of fiscal policy rules

Economic and Monetary Union can be characterised as a complicated set of legislation and institutions governing monetary and fiscal responsibilities. The measures of fiscal responsibility are to be guided by the Stability and Growth Pact, which sets rules for fiscal policy and makes a discretionary fiscal policy virtually impossible. To analyse the effects of the fiscal and monetary policy mix, we modified the New Keynesian framework to allow for supply effects of fiscal policy. We show that defining a supply-side channel for fiscal policy using an endogenous output gap changes the stabilising properties of monetary policy rules. The stability conditions are affected by fiscal policy, so that the dichotomy between active (passive) monetary policy and passive (active) fiscal policy as stabilising regimes does not hold, and it is possible to have an active monetary - active fiscal policy regime consistent with dynamical stability of the economy. We show that, if we take supply-side effects into ac-count, we get more persistent inflation and output reactions. We also show that the dichotomy does not hold for a variety of different fiscal policy rules based on government debt and budget deficit, using the tax smoothing hypothesis and formulating the tax rules as difference equations. The debt rule with active monetary policy results in indeterminacy, while the deficit rule produces a determinate solution with active monetary policy, even with active fiscal policy. The combination of fiscal requirements in a rule results in cyclical responses to shocks. The amplitude of the cycle is larger with more weight on debt than on deficit. Combining optimised monetary policy with fiscal policy rules means that, under a discretionary monetary policy, the fiscal policy regime affects the size of the inflation bias. We also show that commitment to an optimal monetary policy not only corrects the inflation bias but also increases the persistence of output reactions. With fiscal policy rules based on the deficit we can retain the tax smoothing hypothesis also in a sticky price model.

Studies on the Effects of Property Taxation, Rent Control and Housing Allowances

Tämä väitöskirja koostuu asuntomarkkinoiden taloustieteellistä analyysia esittelevästä johdantoluvusta ja kolmesta tutkimuksesta, joissa analysoidaan asuntomarkkinoihin vaikuttavia politiikkatoimenpiteitä. Luvussa 2 tutkitaan Suomen kiinteistöverojärjestelmän vaikutusta asuntorakentamiseen. Vuonna 2001 tehtiin uudistus, jonka myötä kunnat voivat verottaa rakentamatonta asuintonttia korkeammalla veroasteella kuin rakennettua tonttia. Maanomistajan rakentamispäätöksen teoreettisen mallin mukaan rakentamattoman tontin korotettu kiinteistöveron pitäisi nopeuttaa rakentamista, mutta toisaalta myös rakentamiseen investoitu rahamäärä saattaa muuttua. Asuintonttien kiinteistöverojen yleinen taso ei vaikuta maanomistajan käyttäytymiseen, sillä tontin verotusarvo ei riipu rakentamispäätöksestä. Vain rakentamattoman ja rakennetun tontin veroasteiden erolla on merkitystä. Empiiriset tulokset ovat sopusoinnussa teorian kanssa. Tulosten mukaan prosenttiyksikön nousu rakentamattoman ja rakennetun tontin veroasteiden erossa lisää omakotialoitusten määrää viidellä prosentilla lyhyellä aikavälillä. Luvussa 3 analysoidaan vuokrasääntelystä vuokralaisille aiheutuvia hyötyjä ja haittoja. Vuokrasäännellyissä asunnoissa asuvat kotitaloudet hyötyvät vuokrasääntelystä alhaisen vuokran muodossa. Heille saattaa kuitenkin koitua myös haittaa siitä, että toiveita vastaavan asunnon löytäminen on vuokrasääntelytilanteessa vaikeaa, koska vapaille asunnoille on suuri määrä ottajia. Vapaarahoitteisen vuokra-asuntokannan vuokrien sääntely purettiin Suomessa asteittain vuosina 1992–1995. Tutkimuksen empiiriset tulokset viittaavat siihen, että vuokrasääntelyn aiheuttamista suurista eroista halutun ja todellisen asuntokulutuksen välillä koituvat hyvinvointitappiot kumosivat merkittävän osan matalien vuokrien hyödyistä vuokralaisille. Luvussa 4 tutkitaan Suomen asumistukijärjestelmän kannustinvaikutuksia. Asumistuen määrää rajoittavat asunnon pinta-alalle ja neliövuokralle asetetut ylärajat. Neliövuokrarajoite voidaan tulkita asumisen laatua rajoittavana tekijänä. Tutkimuksen teoreettisessa osassa osoitetaan, että asumistukijärjestelmä luo vahvat kannustimet muuttaa asuntoihin, joissa pinta-ala- ja laaturajoitteet purevat. Empiiristen tulosten mukaan asumistukeen oikeutetut kotitaloudet eivät näytä reagoivan kannusteisiin. Tukeen oikeutettujen kotitalouksien asumisvalinnat suhteessa pinta-ala ja laaturajoitteisiin vastaavat muiden kotitalouksien valintoja ja asunnonvaihdon mahdollistama potentiaalinen asumistuen lisäys ei nosta muuttotodennäköisyyttä. Muuttamiseen liittyvät kustannukset ja vajavaiset tiedot tukijärjestelmästä saattavat selittää heikkoa reagointia asumistuen luomiin kannustimiin. Toinen mahdollinen selitys on asumistuen vajaakäyttö. Tutkimuksen mukaan vain 70–80 prosenttia asumistukeen oikeutetuista kotitalouksista nostaa tukea. Asumistuen hyödyntämisen todennäköisyys riippuu koulutustasosta, tuen määrästä ja tulo-odotuksista.

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.

Effects of 17α-ethinyl estradiol on the mating system of the sand goby (Pomatoschistus minutus)

In aquatic environments, endocrine disrupting chemicals (EDCs) that interfere with the endocrinology of males and females form a threat to the maintenance of populations. EDCs are a diverse group of natural and manmade chemicals that already at very low concentrations (at nanogram levels) can have severe effects on reproduction by individuals, e.g. complete sex reversal, feminisation of males, impaired reproduction even resulting in near extinction of populations. With regard to fish, despite the extensive literature on physiological effects of EDCs, very little is known about potential population-level effects. In this thesis, I examined how 17α-ethinyl estradiol (EE2), a synthetic estrogen used in oral contraceptive pills, affects the reproductive behaviour of a marine fish, the sand goby (Pomatoschistus minutus). The aims were fourfold. First, I investigated how exposure to EE2 affects courtship and parental care of sand goby males. Secondly, I looked at effects on the mating system and sexual selection. In the third study, I observed the effects of exposure in a social context where exposed males had to compete with non-exposed males for resources and mates. Finally, I studied the effects of exposure on male-male competition and male aggressive behaviour. This work revealed that EE2 exposure impairs the ability of males to acquire and defend a nest, as well as diminishes the attractiveness of males to females by decreasing their courtship and aggressive behaviour. These effects are harmful for a male whose reproductive success is determined by the ability to compete for limited resources and to attract mates. Furthermore, this thesis showed that selection on male size was relaxed after EE2 exposure and male size had a smaller effect on mating success. These effects can be of a profound nature as they interfere with sexual selection, and may in the long run lead to the loss of traits maintained through sexual selection. The thesis shows that an exposure to environmentally relevant levels of EE2 clearly reduces the chances of individuals to reproduce successfully. Furthermore, it strongly suggests that several types of biomarkers should be used to detect and assess the effects of EDC exposure because severe behavioural effects can sometimes be seen before effects are detectable at the molecular or morphometric level. Behavioural assays should be considered an important complementary tool for the standard ecotoxicological assays because observed behavioural changes have direct and negative effects on fitness, while the connection between changes in molecular expression and fitness may be less obvious.

Short-term effects of variable retention on epigaeic spiders and carabid beetles in Finland

Forestry has influenced forest dwelling organisms for centuries in Fennoscandia. For example, in Finland ca. 30% of the threatened species are threatened because of forestry. Nowadays forest management recommendations include practices aimed at maintaining biodiversity in harvesting, such as green-tree retention. However, the effects of these practices have been little studied. In variable retention, different numbers of trees are retained, varying from green-tree retention (at least a few live standing trees in clear-cuts) to thinning (only individual trees removed). I examined the responses of ground-dwelling spiders and carabid beetles to green-tree retention (with small and large tree groups), gap felling and thinning aimed at an uneven age structure of trees. The impacts of these harvesting methods were compared to those of clear-cutting and uncut controls. I aimed to test the hypothesis that retaining more trees positively affects populations of those species of spiders and carabids that were present before harvesting. The data come from two studies. First, spiders were collected with pitfall traps in south-central Finland in 1995 (pre-treatment) and 1998 (after-treatment) in order to examine the effects of clear-cutting, green-tree retention (with 0.01-0.02-ha sized tree groups), gap felling (with three 0.16-ha sized openings in a 1-ha stand), thinning aiming at an uneven age structure of trees and uncut control. Second, spiders and carabids were caught with pitfall traps in eastern Finland in 1998-2001 (pre-treatment and three post-treatment years) in eleven 0.09-0.55-ha sized retention-tree groups and clear-cuts adjacent to them. Original spider and carabid assemblages were better maintained after harvests that retained more trees. Thinning maintained forest spiders well. However, gap felling and large retention-tree groups maintained some forest spider and carabid species in the short-term, but negatively affected some species over time. However, use of small retention-tree groups was associated with negative effects on forest spider populations. Studies are needed on the long-term effects of variable retention on terrestrial invertebrates; especially those directed at defining appropriate retention patch size and on the importance of structural diversity provided by variable retention for invertebrate populations. However, the aims of variable retention should be specified first. For example, are retention-tree groups planned to constitute life-boats , stepping-stones or to create structural diversity? Does it suffice that some species are maintained, or do we want to preserve the most sensitive ones, and how are these best defined? Moreover, the ecological benefits and economic costs of modified logging methods should be compared to other approaches aimed at maintaining biodiversity.

Effects of environmental variation on ecological and evolutionary dynamics

Environmental variation is a fact of life for all the species on earth: for any population of any particular species, the local environmental conditions are liable to vary in both time and space. In today's world, anthropogenic activity is causing habitat loss and fragmentation for many species, which may profoundly alter the characteristics of environmental variation in remaining habitat. Previous research indicates that, as habitat is lost, the spatial configuration of remaining habitat will increasingly affect the dynamics by which populations are governed. Through the use of mathematical models, this thesis asks how environmental variation interacts with species properties to influence population dynamics, local adaptation, and dispersal evolution. More specifically, we couple continuous-time continuous-space stochastic population dynamic models to landscape models. We manipulate environmental variation via parameters such as mean patch size, patch density, and patch longevity. Among other findings, we show that a mixture of high and low quality habitat is commonly better for a population than uniformly mediocre habitat. This conclusion is justified by purely ecological arguments, yet the positive effects of landscape heterogeneity may be enhanced further by local adaptation, and by the evolution of short-ranged dispersal. The predicted evolutionary responses to environmental variation are complex, however, since they involve numerous conflicting factors. We discuss why the species that have high levels of local adaptation within their ranges may not be the same species that benefit from local adaptation during range expansion. We show how habitat loss can lead to either increased or decreased selection for dispersal depending on the type of habitat and the manner in which it is lost. To study the models, we develop a recent analytical method, Perturbation expansion, to enable the incorporation of environmental variation. Within this context, we use two methods to address evolutionary dynamics: Adaptive dynamics, which assumes mutations occur infrequently so that the ecological and evolutionary timescales can be separated, and via Genotype distributions, which assume mutations are more frequent. The two approaches generally lead to similar predictions yet, exceptionally, we show how the evolutionary response of dispersal behaviour to habitat turnover may qualitatively depend on the mutation rate.

Effects of solar radiation pressure and Aerodynamic forces on satelliteattitude Dynamics and their utilization for Control: a survey

The environmcnl exerts an important inJuence on the pefirmance of space systems. A brief rel'iew of mo.s/ of the studies, pre.~ented over the past eightem years, relating to the influence ar7d the possible utilization of thc solar radiation pressure &d aero&namic forces, with particular reference to attitude dynamics and control qf satellites is presented here. The semi-passive stabilizers employing rhese forces show p~qmise of long life, low power and economic sjsfems, which though slower in response, compare we1I wit11 the octiw coi~trollers. It is felt that mud more attention is necessary to the actual implema~tution of these ideas and devices: some of which me quite ingenious und unique.

Environmental effects of thermal and radioactive discharges from nuclear power plants in the boreal brackish-water conditions of the northern Baltic Sea

During recent decades, thermal and radioactive discharges from nuclear power plants into the aquatic environment have become the subject of lively debate as an ecological concern. The target of this thesis was to summarize the large quantity of results obtained in extensive monitoring programmes and studies carried out in recipient sea areas off the Finnish nuclear power plants at Loviisa and Olkiluoto during more than four decades. The Loviisa NPP is located on the coast of the Gulf of Finland and Olkiluoto NPP on that of the Bothnian Sea. The state of the Gulf of Finland is clearly more eutrophic; the nutrient concentrations in the surface water are about 1½ 2 times higher at Loviisa than at Olkiluoto, and the total phosphorus concentrations still increased in both areas (even doubled at Loviisa) between the early 1970s and 2000. Thus, it is a challenge to distinguish the local effects of thermal discharges from the general eutrophication process of the Gulf of Finland. The salinity is generally low in the brackish-water conditions of the northern Baltic Sea, being however about 1 higher at Olkiluoto than at Loviisa (the salinity of surface water varying at the latter from near to 0 in early spring to 4 6 in late autumn). Thus, many marine and fresh-water organisms live in the Loviisa area close to their limit of existence, which makes the biota sensitive to any additional stress. The characteristics of the discharge areas of the two sites differ from each other in many respects: the discharge area at Loviisa is a semi-enclosed bay in the inner archipelago, where the exchange of water is limited, while the discharge area at Olkiluoto is more open, and the exchange of water with the open Bothnian Sea is more effective. The effects of the cooling water discharged from the power plants on the temperatures in the sea were most obvious in winter. The formation of a permanent ice cover in the discharge areas has been delayed in early winter, and the break-up of the ice occurs earlier in spring. The prolonging of the growing season and the disturbance of the overwintering time, in conditions where the biota has adjusted to a distinct rest period in winter, have been the most significant biological effects of the thermal pollution. The soft-bottom macrofauna at Loviisa has deteriorated to the point of almost total extinction at many sampling stations during the past 40 years. A similar decline has been reported for the whole eastern Gulf of Finland. However, the local eutrophication process seems to have contributed into the decline of the zoobenthos in the discharge area at Loviisa. Thermal discharges have increased the production of organic matter, which again has led to more organic bottom deposits. These have in turn increased the tendency of the isolated deeps to a depletion of oxygen, and this has further caused strong remobilization of phosphorus from the bottom sediments. Phytoplankton primary production and primary production capacity doubled in the whole area between the late 1960s and the late 1990s, but started to decrease a little at the beginning of this century. The focus of the production shifted from spring to mid- and late summer. The general rise in the level of primary production was mainly due to the increase in nutrient concentrations over the whole Gulf of Finland, but the thermal discharge contributed to a stronger increase of production in the discharge area compared to that in the intake area. The eutrophication of littoral vegetation in the discharge area has been the most obvious, unambiguous and significant biological effect of the heated water. Myriophyllum spicatum, Potamogeton perfoliatus and Potamogeton pectinatus, and vigorous growths of numerous filamentous algae as their epiphytes have strongly increased in the vicinity of the cooling water outlet, where they have formed dense populations in the littoral zone in late summer. However, the strongest increase of phytobenthos has extended only to a distance of about 1 km from the outlet, i.e., the changes in vegetation have been largest in those areas that remain ice-free in winter. Similar trends were also discernible at Olkiluoto, but to a clearly smaller extent, which was due to the definitely weaker level of background eutrophy and nutrient concentrations in the Bothnian Sea, and the differing local hydrographical and biological factors prevailing in the Olkiluoto area. The level of primary production has also increased at Olkiluoto, but has remained at a clearly lower level than at Loviisa. In spite of the analogous changes observed in the macrozoobenthos, the benthic fauna has remained strong and diversified in the Olkiluoto area. Small amounts of local discharge nuclides were regularly detected in environmental samples taken from the discharge areas: tritium in seawater samples, and activation products, such as 60Co, 58Co, 54Mn, 110mAg, 51Cr, in suspended particulate matter, bottom sediments and in several indicator organisms (e.g., periphyton and Fucus vesiculosus) that effectively accumulate radioactive substances from the medium. The tritium discharges and the consequent detection frequency and concentrations of tritium in seawater were higher at Loviisa, but the concentrations of the activation products were higher at Olkiluoto, where traces of local discharge nuclides were also observed over a clearly wider area, due to the better exchange of water than at Loviisa, where local discharge nuclides were only detected outside Hästholmsfjärden Bay quite rarely and in smaller amounts. At the farthest, an insignificant trace amount (0.2 Bq kg-1 d.w.) of 60Co originating from Olkiluoto was detected in Fucus at a distance of 137 km from the power plant. Discharge nuclides from the local nuclear power plants were almost exclusively detected at the lower trophic levels of the ecosystems. Traces of local discharge nuclides were very seldom detected in fish, and even then only in very low quantities. As a consequence of the reduced discharges, the concentrations of local discharge nuclides in the environment have decreased noticeably in recent years at both Loviisa and Olkiluoto. Although the concentrations in environmental samples, and above all, the discharge data, are presented as seemingly large numbers, the radiation doses caused by them to the population and to the biota are very low, practically insignificant. The effects of the thermal discharges have been more significant, at least to the wildlife in the discharge areas of the cooling water, although the area of impact has been relatively small. The results show that the nutrient level and the exchange of water in the discharge area of a nuclear power plant are of crucial importance.

Effects of glycerol on enzymatic hydrolysis and ethanol production using sugarcane bagasse pretreated by acidified glycerol solution

In this study, for the first time the effects of glycerol on enzymatic hydrolysis and ethanol fermentation were investigated. Enzymatic hydrolysis was inhibited slightly with 2.0 wt% glycerol, leading to reduction in glucan digestibility from 84.9% without glycerol to 82.9% (72 h). With 5.0 wt% and 10.0 wt% glycerol, glucan digestibility reduced by 4.5% and11.0%, respectively. However, glycerol appeared not detrimental to cellulase enzymes. Ethanol fermentation was not affected with glycerol up to 5.0 wt%, and was inhibited slightly with 10.0 wt% glycerol, which resulted in reduction in ethanol yield from 86.0% without glycerol to 83.7% (20 h). Based on laboratory and pilot scale enzymatic hydrolysis and ethanol production results, it was estimated that 0.142 kg ethanol could be produced from 1.0 kg dry bagasse (a glucan content of 38.0%) after pretreatment with acidified glycerol solution.

Effects of recreational use and fragmentation on the understorey vegetation and soil microbial communities of urban forests in southern Finland

The impacts of fragmentation and recreational use on the hemiboreal urban forest understorey vegetation and the microbial community of the humus layer (the phospholipid fatty acid (PLFA) pattern, microbial biomass and microbial activity, measured as basal respiration) were examined in the greater Helsinki area, southern Finland. Trampling tolerance of 1) herb-rich OMT, 2) mesic MT, and 3) sub-xeric VT forests (in decreasing order of fertility) was studied by comparing relative understorey vegetation cover (urban/untrampled reference ratio) of the three forest types. The trampling tolerance of forest vegetation increased with the productivity of the site (sub-xeric < mesic < herb-rich). Wear of understorey vegetation correlated positively with the number of residents (i.e., recreational pressure) around the forest patch. An increase of 15000 residents within a radius of 1 km around a forest patch was associated with ca. 30% decrease in the relative understorey vegetation cover. The cover of dwarf shrub Vaccinium myrtillus in particular decreased with increasing levels of wear. The cover of mosses in urban forests was less than half of that in untrampled reference areas. Cover of tree saplings, mainly Sorbus aucuparia, and some resilient herbs was higher than in the reference areas. In small urban forest fragments, broad-leaved trees, grasses and herbs were more abundant and mosses were scarcer than in larger urban forest areas. Thus, due to trampling and edge effects, resilient herb and grass species are replacing sensitive dwarf shrubs, mosses and lichens in urban forests. Differences in the soil microbial community structure were found between paths and untrampled areas and the effects of paths extended more than one meter from the paths. Paths supported approximately 25-30% higher microbial biomass with a transition zone of at least 1 m from the path edge. However, microbial activity per unit of biomass was lower on paths than in untrampled areas. Furthermore, microbial biomass and activity were 30-45% lower at the first 20 m into the forest fragments, due to low moisture content of humus near the edge. The decreased microbial activity detected at forest edges and paths implies decreased litter decomposition rates, and thus, a change in nutrient cycling. Changes in the decomposition and nutrient supply may in turn affect the diversity and function of plant communities in urban forests. Keywords: boreal forest vegetation, edge effects, phospholipid fatty acids, trampling, urban woodlands, wear

Effects of environment on surface-wave characteristics of a dielectric-coated conductor .4.

The problem of excitation of 11zultilayercd-graded-dielectric-coatedc onductor by a magnetic ring source is fornzulated in the ,form of a contour integrul which is rolved by using the method of steepest descent. Numerical evaluation of launching efiiency shows that high value of about 90 percent can be attained by choosing proper dimensions of the launcher with respect to the dimension of the surface wave line.