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Monetary Policy and Inflation Indicators for Finland

44 Pages Posted: 15 Feb 2006  

Martin Mühleisen

International Monetary Fund (IMF)

Date Written: November 1995


This paper is assessing various leading indicators of inflation in Finland and their practical role in a framework for Finnish monetary policy under a floating exchange rate. Following Friedman (1990) who argued for the explicit inclusion of a broad set of economic indicators in the monetary decision process, absent a practical intermediate target, this paper tests a large number of indicators for their relevance in determining future inflationary pressure and guiding monetary policy. The robustness of the indicators is examined under different models, guided by alternative views of the monetary transmission process. The results indicate that a monetary conditions index, stumpage prices, and real and nominal effective exchange rates are among the strongest indicators, affecting inflation with a lag of between 4 and 11 quarters.

JEL Classification: C113, O11, O55

Suggested Citation

Mühleisen, Martin, Monetary Policy and Inflation Indicators for Finland (November 1995). IMF Working Paper, Vol. , pp. 1-44, 1995. Available at SSRN:

Martin Muhleisen (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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