External authors

Erkki Vihriälä

Research Assistant

Erkki, a Finnish citizen, holds an MSc Economics from the London School of Economics in addition to a Bachelor’s degree from the University of Helsinki. Prior to joining Bruegel, Erkki worked as an intern at the Bank of Finland. There he studied the fundamental determinants of current accounts and considered the need for global adjustments in external positions. 

Erkki’s core interests include empirical macroeconomics, monetary economics and financial economics. He is fluent in English, French and Finnish.

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Blueprint

Manufacturing Europe’s future

‘Manufacturing Europe’s future’ means getting the policies right for firms to grow and prosper. It is not about picking one sector over another, but primarily about setting the right framework conditions for growth, innovation and jobs.

By: Francesca Barbiero, Michael Blanga-Gubbay, Valeria Cipollone, Koen De Backer, Sébastien Miroudot, Alexandros Ragoussis, André Sapir, Reinhilde Veugelers, Erkki Vihriälä, Guntram B. Wolff and Georg Zachmann Topic: Energy & Climate, Innovation & Competition Policy Date: October 1, 2013
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Policy Contribution

European Parliament

Does the European Semester deliver the right policy advice?

This Policy Contribution was prepared for the European Parliament's 'Economic Dialogue with the President of the Eurogroup' Jeroen Djisselbloem'. The July 2013 European Council recommendations to the euro area recognise a number of fiscal and macrostructural challenges, but do not fully exploit the options made possible by the European economic governance framework. 

By: Zsolt Darvas and Erkki Vihriälä Topic: European Macroeconomics & Governance, European Parliament Date: September 19, 2013
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Blog Post

Euro area adjustment in a low inflation environment

Inflation in the euro area remains low. Eurostat’s most recent figures show that inflation in the monetary union remained unchanged at 1.6 % in July compared to the same month a year ago. This post analyses price developments in a bit more detail to assess underlying inflation pressures. Feasibility of relative price adjustment in the monetary union is also considered.

By: Erkki Vihriälä Topic: European Macroeconomics & Governance Date: August 20, 2013
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Blog Post

Greek exposure to Cyprus: the unintended consequences of restructuring

Europe failed to properly address the consequences of the Greek debt restructuring. The crisis came back with a vengeance when the Cypriot crisis eventually came to the fore

By: Erkki Vihriälä and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: August 13, 2013
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Blog Post

Much pain for small gain: difficulty of cost adjustment in the euro area

IMF’s latest World Economic Outlook discussed reasons for relatively stable inflation following the Great Recession. It noted that large output gaps and high unemployment have resulted in surprisingly little disinflation in advanced countries. This was attributed to more firmly anchored long-term inflation expectations as well as the reluctance of workers to accept nominal wage cuts. The positive implication is that efforts to stimulate the economy should not result in rapidly rising inflation even if output gaps are overestimated provided that long-term expectations remain anchored. However, the finding also means that intra-euro area price adjustment is more challenging, which is the focus of this blog entry.

By: Erkki Vihriälä and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: August 7, 2013
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Blog Post

Deposit flight and deleveraging of the Cypriot banking system – an update

We documented the initial deposit flight from Cypriot banks after the country’s rescue package. The central bank of Cyprus released today data on deposits in Cypriot banks by non-banks at the end of May. These declined by 1.4 bn EUR from a month earlier, i.e. by 2.5 %. This brings the cumulated decline February–May to 17.1 %. In this post we examine the evolution of the balance sheet of Cypriot banks a bit more thoroughly, by inspecting also the evolution of assets and other liabilities than deposits. We also attempt to clear some of the issues with Cypriot data.

By: Carlos De Sousa and Erkki Vihriälä Topic: European Macroeconomics & Governance Date: July 23, 2013
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Blog Post

Southern Europe no longer indebting to the rest of the world

This post is an update on the current account developments in Southern Europe and the composition of corresponding financial flows.

By: Erkki Vihriälä Topic: European Macroeconomics & Governance Date: June 12, 2013
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Blog Post

Who got their money out of Cyprus?

The Central Bank of Cyprus released data today on the amount of deposits in Cypriot banks at the end of March. The original rescue plan, involving haircuts to uninsured deposits, was announced on the 16th of March and the final modified agreement on the 25th of March. The data is therefore an early indicator of: (i) the degree of rush by depositors to withdraw their money; (ii) the efficiency of Cypriot capital controls.

By: Erkki Vihriälä Topic: European Macroeconomics & Governance Date: April 29, 2013
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Blog Post

Italy’s elections had little impact on TARGET2 balances

We documented early signs of improved market sentiment towards struggling euro members in this post at the end of January. Since then, however, European economic data has been mostly disappointing.

By: Erkki Vihriälä Topic: European Macroeconomics & Governance Date: April 9, 2013
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Blog Post

Preventing bank runs – a primer

Worries about Cyprus  at first decreased with the second agreement between the Cypriot government and euro area partners. Controversially, however,capital controls have been used as a way to prevent an outright bank run. This blog briefly reviews the literature on bank runs and comments on different ways to prevent them.

By: Erkki Vihriälä Topic: European Macroeconomics & Governance Date: April 2, 2013
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Blog Post

Effects of austerity revisited – how GDP surprised and why?

The debate about appropriate fiscal policy has been fluctuating since the onset of the financial crisis.

By: Erkki Vihriälä Topic: European Macroeconomics & Governance Date: March 22, 2013
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Blog Post

(Slowly) back to normal in the Eurozone?

Private capital is returning to the distressed Eurozone countries and sovereign bonds. 2012 might be remembered as the year in which two “ends of the world” were luckily averted: one, thanks to the wrong intuition of a Mayan forecaster; the other one, thanks to the right intuition of a European central banker.

By: Erkki Vihriälä Topic: European Macroeconomics & Governance Date: January 31, 2013
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