The Aino 3.0 Model

89 Pages Posted: 8 Jun 2020

See all articles by Aino Silvo

Aino Silvo

University of Helsinki - Department of Political and Economic Studies

Fabio Verona

Bank of Finland - Research

Date Written: June 8, 2020


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).

Keywords: business cycles, small open economy, credit constraints, housing market, long-term debt

JEL Classification: E21, E32, E44, F41, R31

Suggested Citation

Silvo, Aino and Verona, Fabio, The Aino 3.0 Model (June 8, 2020). Bank of Finland Research Discussion Paper No. 9/2020, Available at SSRN: or

Aino Silvo (Contact Author)

University of Helsinki - Department of Political and Economic Studies ( email )

P.O. Box 54
FIN-00014 Helsinki

Fabio Verona

Bank of Finland - Research ( email )

P.O. Box 160
FIN-00101 Helsinki


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