Riksbankens mandat bör förtydligas, sysselsättningen ges större vikt, den demokratiska kontrollen av Riksbanken skärpas och koordineringen av penningpolitiken och makrotillsynen förbättras. Det skriver jag i den nya underlagsrapporten Penningpolitik och full sysselsättning för LOs projekt Full sysselsättning och solidarisk lönepolitik. Continue reading
English translation of Ekonomistas post (in Swedish)
International studies have shown that economic downturns that are preceded by a large increase in household debt tend to be deeper and more protracted. The Riksbank claims, however, that a high level of household debt leads to deeper economic downturns. The Riksbank refers to some international studies that are supposed to support its claim. But the Riksbank conceals that these studies rather contradict the Riksbank’s claim. This is yet another example that the Riksbank’s documents and reports, with Harry Flam’s words (in Swedish), are not “comprehensive, professional and impartial, but seem to be doctored to support a particular view.” Continue reading
[English translation of Ekonomistas post (in Swedish).]
When the policy rate has reached its lower bound (which is not necessarily zero, but perhaps minus 0.25 or even minus 0.50 percent), there are in addition to forward guidance about the future policy rate several so-called unconventional means to pursue more expansionary monetary policy, if needed. They include asset purchases (balance sheet policies) and exchange-rate policy. As inflation in Sweden has been around zero for several years, and unemployment has remained very high, such unconventional means may well be needed for the Riksbank to fulfill its mandate to stabilize both inflation around the inflation target and resource utilization around a long-run sustainable level.
The recent experience of the Czech National Bank may be very relevant in this context. The CNB has in the last year, in a situation with a binding lower bound for the policy rate, made an apparently successful monetary policy experiment by depreciating the Czech currency and introducing an exchange-rate floor in order to better meet its inflation target and get the economy out of its long recession. Continue reading
English translation of Ekonomistas post.
In a recent speech, Deputy Governor Per Jansson presents old arguments that I have already responded to, in an attempt to defend the Riksbank’s monetary policy and to criticize its by now several critics. One might think that Jansson might use his time to learn from the Riksbank’s mistakes instead of trying to attack its critics. In any case, a close examination of the facts and data shows that Jansson’s defense of the Riksbank fails. Continue reading
“Forward guidance”, presentation at the RBNZ and IJCB conference “Reflections on 25 years of inflation targeting,” December 1-2, 2014, Wellington, New Zealand. Powerpoint slides.
Panel introduction (slides) at the Conference on European Economic Integration 2014: The Rebalancing Challenge in Europe – Perspectives for (central, eastern, and southeastern Europe (CESEE), Vienna, November 24-25, 2014.
The Big Read in Financial Times, November 20, 2014: Sveden’s central bank – Stockholm syndrome
Does a trivial econometric error explain why Andersson and Jonung (2014) get different
estimates of a Swedish Phillips curve than the very robust estimates that I get in Svensson
(2014, 2015)? Yes, their trivial error is not to have done the standard test for weak
instruments when using regressions with instrumental variables. Their instruments soundly
fail the standard Cragg-Donald F-test. Their instruments are weak and as a consequence their
estimates of the Phillips curve are unreliable, not mine. See this note.
Lars Jonung has repeatedly in Swedish media in sweeping terms criticized my estimate of the increase in average unemployment caused by the fact that average inflation in Sweden significantly undershot the target during 1997-2011. Every time I have replied and shown and pointed out that he is wrong on all counts, lately in this Ekonomistas post (in Swedish) and in Svenska Dagbladet (also in Swedish). Now, Fredrik Andersson and Jonung have written a long paper with a series of regressions which are supposed to show that my results are not robust. The idea of Andersson and Jonung is, despite the common practice in similar studies and despite econometric problems with overlapping data, to use annual inflation instead of quarterly inflation. However, on closer inspection, their regressions turn out to be misspecified and not reliable. When I examine corrected versions and run new regressions with annual inflation, they confirm my previous estimate. Again it seems that Jonung is wrong on all counts. Continue reading
New Ekonomistas post: “Ingves försöker försvara sig” (“Ingves tries to defend himself,” in Swedish).
Interview in Svenska Dagbladet, November 11, 2010: “Sänk räntan till minus” (“Set the policy rate negative, in Swedish)
Interview in Svenska Dagbladet, November 11, 2010: “Jonung har helt enkelt fel i praktiskt taget allt han säger” (“Jonung is simply wrong in practically all he is saying,” in Swedish)
Ekonomistas post: “Jonung and sanningen” (“Jonung and the truth”, i Swedish).
Bloomberg, October 31, 2014: “Central Banker Hero Becomes Face of Failure in Swedish Tale“
Editorial in Financial Times, October 30, 2014.