The Paper

Devaluation is like pissing in your pants during winter. It warms you for a while, but then it gets colder than before. - The Finnish president Urho Kaleva Kekkonen

In this blog I'm going to give a brief introduction of what is going on with my academic life at the moment. Currently I'm overwhelmed with the glooming deadlines of my Bachelor's Thesis, that is due this Spring. Then (hopefully) I will get my first degree; B.Sc in Economics and Business Administration.

The writing process is really going to take a while and a huge junk from my spare time, so just for warning, I might not be able to write any additional thoughts in economics for my blog for a while. All of my time is going to one topic: The effects of common currency for the Finnish forest industry.

Why the topic is significant? Finland has currently one of the biggest forest and paper industries in the world. The forest and paper industry form over 30 % of Finland's exports and have a huge contribution for the Finnish economy. Finnish companies like Metsä, Stora Enso and UPM-Kymmene are among the biggest forest and paper companies in the world.

During the Finnish history, the forest industry due to its contribution and size has been one of the major reasons for currency devaluation debates in Finland. As we know from the macroeconomic theory, the value of the currency affects the competitiveness of domestic export industries and the price level of foreign imports.

As Finland is a relatively open economy and exporting over a third from its production, the currency and monetary policies have been a key link for the competitiveness of the forest industry since the 1930's. Also the exchange rate fluctuations and uncertainty, the devaluation of the pound during the 1930's and the dollar later during the OPEC oil-crisis in the 1970's have affected the Finnish forest industry in various ways.

The acknowledged benefits of using the common currency in a monetary union, for instance, are the elimination of transaction costs between currencies and the reduction of exchange rate uncertainty. The downside however, is the loss of independent monetary policy and the ability to affect to the competitiveness of domestic export industries by revaluation or devaluation of the nation's currency. Also the ability to adapt to different kinds of asymmetric shocks and devaluations of competitive nations is considered as a loss. Also the use of monetary policy as a way to tackle inflation is lost.

This is what my becoming research is focusing on. If the forest industry has been affected by independent monetary policy so many times during the course of history, how the common currency potentially affects the competitiveness, economy and the profitability of the forest industry in Finland.

I started by looking up some macroeconomic theory concerning monetary unions, common currencies, exchange rates and monetary policies. In addition to that, I took a closer look on the history and the basic characteristics of the Finnish forest industry.

After that, I gathered my findings by using 4 questions concerning my research question. Since my question was about the effects of common currency for the Finnish forest industry, I went through my research material by thinking first the basic characteristics of common currency and then the positive and negative effects for the forest industry during history. So basically, I cut my research question in half to find the correct things that I could draw together to answer my research question.

So yeah, I put some post-its for my wall since I'm a creative yet an misunderstood artist. From the post-its I'm going to find some similarities and to reorganize my findings to find 3-4 topics that are common with some parts of my findings. Those 3-4 topics are hopefully going to answer to my research question in a relevant way.

I have to say, that even though this is just another school work, as a geek I'm excited about doing something on my own instead of going through lectures and homework. I know I'm 100 % going to be in a hurry to get the work done in time, but I'll try to do my best to survive with the power of hard rock and taste and fragrance of dark-roasted coffee.

What I've heard from my classmates, almost everyone has their thesis in a stage called "soon to be starting". One purpose of this blog was not only to brag about my work, but more about introducing my method of doing research for those of you who might have some troubles with their own thesis (since I know my classmates are reading my blog).

When my work is complete and published I'm definitely going to post a link for all of you to read in case you're interested. Patience.

Text: SW