Mika Nieminen

Elevated nutrient concentrations in headwaters affected by drained peatland

Nutrient export from drained peatland has significant impacts on aquatic environments in Nordic catchments. Spatial information on variations in nutrient concentrations across different landscapes and land uses is needed to design measures for achieving the good ecological status of the EU Water Framework Directive. In this study we determined background concentrations in natural peatland-dominated streams and examined effects of peatland use practices on water quality in headwater catchments. We quantified sources for different elements by joint analysis of water chemistry, isotopes, and hydrology for 62 small catchments in North Ostrobothnia, Finland. Concentrations of nutrients and suspended solids were relatively high in catchments containing drained peatland. In particular, dissolved nitrogen and phosphorus concentrations were elevated during baseflow conditions when flow likely originated from deeper soil layers. Total concentrations of nutrients, suspended solids, and loss on ignition also showed elevated values, and changes in the ratio of dissolved and particulate forms, especially the C/N ratio, were observed. Past drainage had a stronger effect on organic matter and nutrients concentrations than local hydroclimate conditions. These results strongly indicate that current water protection methods are not sufficient to capture all seasonal variations in nutrient and suspended solid loads from drained peatland. Thus, more effort and actions are needed for water protection in such areas.

Patterns of international capital flows and their implications for developing countries

According to a standard economic theory, capital should flow from rich capitalabundant countries to poor capital-scarce countries. However, a reverse pattern has prevailed in the world economy. This is the so-called Lucas paradox. In addition, it has been shown that counterintuitively there is negative correlation between capital inflow and productivity growth across developing countries. This is the so-called allocation puzzle. This survey attempts to shed light on the following questions: 1) What are the patterns of international capital flows in the world economy? 2) What are the most plausible explanations for these patterns? 3) What are the possible implications of these developments for developing countries?

Short-Run Dynamics of the Trade Balance in the Emu-12 Countries

During the pre‐EMU period real effective exchange rate or domestic and foreign GDP per capita growth rate differential Granger‐caused aggregate trade balance in most of the EMU‐12 countries. However, our data‐driven paper provides evidence that during the EMU period neither the growth differentials nor the CPI‐based real effective exchange rates have Granger‐caused the aggregate trade balances. When we decompose the aggregate trade balances into the intra balances (trade balance vis‐a‐vis the euro area) and the extra balances (trade balance vis‐a‐vis the rest of the world), we find that typically the change in the dynamics of the aggregate trade balance resulted from a change in the dynamics of the intra balance.

Interest Rate Convergence, External Balances and the Euro Crisis

Typically, the catching-up process between rich Northern Europe and poor Southern Europe and the diverging cost competitiveness between the two regions are considered alternative explanations for the widening current account imbalances in the euro area. This paper proposes a new explanation for the imbalances which led to the 2009 euro crisis i.e. large interest rate differentials among the EMU-12 countries which prevailed before the adoption of the euro. This finding suggests that the euro crisis was, at least to some extent, a consequence of the initial convergence shock.

Coordination of Wage Bargaining, Exchange Rate Stability and External Adjustment

The literature on the determinants of the rate of current account reversion has been limited to examining the role of exchange rate regimes. We propose that the degree of coordination of wage bargaining affects the speed of current account adjustment. Our point estimates are economically and statistically significant, suggesting that fragmented firm-level wage bargaining facilitates external adjustment. We also find a strong negative interaction between the effects of coordination of wage bargaining and exchange rate stability on the rate of current account reversion.

Long-Run Determinants and Short-Run Dynamics of the Trade Balance in the EU-15 Countries

Several studies have analyzed the long-run determinants of current account balances using panel cointegration techniques. In this paper we will study both the long-run determinants and the short-run dynamics of the trade balances in the EU-15 countries. We will analyze each country separately and decompose the aggregate trade balance into the intra balance (trade balance vis-a-vis euro area) and the extra balance (trade balance vis-a-vis the rest of the world). Overall, our results suggest that there are significant differences in the long-run relations across the EU-15 countries which might be overlooked in the panel cointegration studies. In most of the countries there is a long-run cointegration relation between the trade balance, real effective exchange rate, domestic GDP and foreign GDP, but in many cases the coefficient of the trade balance variable is statistically insignificant in the relation. Our results on the short-run dynamics indicate that in general the aggregate trade balance cannot be adjusted by expenditure-switching or expenditure-reducing policies.

The Euro's Effect on Trade Balance Dynamics

During the pre-EMU period changes in real effective exchange rate or faster-than-trading-partners growth rates Granger caused changes in trade balance in most of the EMU-12 countries. However, our data driven article provides evidence that after the adoption of euro, these Granger causalities disappeared. We decompose trade balances into intra balances (trade balance vis-a-vis the euro area) and extra balances (trade balance vis-a-vis the rest of the world), and find that the disappearance of dynamic feedback effect typically occurred in the intra balances rather than in the extra balances. Our results imply that debtor countries cannot reduce their trade deficits in the short-run by enhancing price competitiveness or by adopting austerity policies. Only in Finland the trade balance has improved (or deteriorated) as a result of real effective exchange rate depreciation (or appreciation) during the EMU period.

Culture and current account balances

This article contributes to the literature of current account balances by introducing cultural variables that until now have been omitted. The World Values Survey indicates that the Roman Catholics do not consider thrift as important as others. We propose that Catholic countries tend to run current account deficits. This result remains robust even if we control for close to all of the determinants that have been included in previous studies. We find evidence that the inclination of Catholic countries to have high levels of uncertainty avoidance goes to a great length in explaining the result.

Blessed Mary, Forgive Us Our Deficits

Many studies have explored the medium-term determinants of current account balances. This paper contributes to the existing literature by introducing religious variables that until now have been omitted. We propose that Catholic countries tend to run current account deficits. This result remains robust even if we include both the official financial flows and the variables measuring the quality of institutions. In total we control for close to all of the variables that have been included in previous studies. To rationalize our result we consulted the World Values Survey and discovered that Roman Catholics do not consider thrift as important as other religious groups.