“Negative Interest Rates: Helpful or Harmful?” Interview in Top of Mind, Issue 32, February 27, 2015, Goldman Sachs.
Kate Davidson, “How Some Central Banks Are Reviewed Around the World,” Real Time Economics, The Wall Street Journal, February 20, 2014.
Peter Wolodarski, “Time for Stefan Ingves to hand over the baton” (“Dags för Stefan Ingves att lämna över stafettpinnen“, in Swedish), editorial in Dagens Nyheter, Februari 15, 2015.
“Inflation targeting and leaning against the wind,” paper presented at the Conference on Fourteen Years of Inflation Targeting in South Africa and the Challenges of a Changing Mandate, South African Reserve Bank, Pretoria, October 30-31, 2014. Revised February 2015. Paper. Slides. Program. Continue reading
New publication: “The Possible Unemployment Cost of Average Inflation below a Credible Target,” American Economic Journal: Macroeconomics 7(1) (2015) 258-296.
“Noll ränta räcker inte“, Ekonominyheter från Ekot, Sveriges Radio (“Zero interest rate is not enough,” Radio Sweden’s Economy News (in Swedish)), December 30, 2014.
“Helikopterpengar” (“Helicopter money,” in Swedish), Ekonomistas post.
English translation of Ekonomistas post.
An odd thing is the Riksbank’s repeated assertions, if not nagging, about how expansionary the Riksbank’s monetary policy is supposed to be. “A very expansionary monetary policy,” it says in the Monetary Policy Update December 2014, and so said the Governor Ingves at the press conference after the policy announcement. But according to what criterion would monetary policy be expansionary? According to standard criteria, including comparisons with other countries, the Riksbank’s monetary policy is by no means expansionary, but by all accounts quite contractionary. One may ask whether the Riksbank’s repeated assertions are due to ignorance or is an example of disinformation. Continue reading
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
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.