“Transparency and Communication with Forecast Targeting,” presentation (slides) at “Monetary Policy Framework Issues: Toward the 2021 Inflation-Target Renewal,” a workshop at Bank of Canada, September 14, 2017. Video.
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Englund och Svensson avstyrker Finansinspektionens förslag om skärpt amorteringskrav
Finansinspektionens förslag till skärpt amorteringskrav för hushåll med höga skuldkvoter avstyrks i ett remissvar av Peter Englund och mig.
Motiveringen för förslaget är att högt skuldsatta hushåll skulle kunna komma att minska sin konsumtion kraftigt om räntorna stiger eller vid ett inkomstbortfall och att detta i sin tur skulle kunna förstärka en konjunkturnedgång.
Men, för det första, en konjunkturnedgång skulle normalt mötas med en räntesänkning av Riksbanken, inte en räntehöjning. Detta skulle förbättra högre skuldsatta hushålls kassaflöde mer än lägre skuldsatta. Höga skulder utgör på så vis en slags försäkring mot konjunkturnedgångar, och skulle normalt snarare dämpa än förstärka en konjunkturnedgång. I själva verket ökar höga skulder och rörliga räntor genomslaget för penningpolitiken och ger Riksbanken allt annat lika bättre möjligheter att stabilisera konjunkturen.
För det andra, Finansinspektionens uppfattning att konsumtionen för högt skuldsatta hushåll skulle vara mer inkomstkänslig saknar empiriskt stöd. Den motsägs i själva verket av de vetenskapliga studier av internationella erfarenheter som Finansinspektionen anför till stöd för sin uppfattning.
För det tredje, förslaget innebär ett steg tillbaka mot det tidiga 1980-talets detaljreglerade kreditmarknad, med åtföljande begränsningar av valmöjligheter och välfärd för drabbade hushåll.
Läs hela remissvaret här.
Ekonomista-inlägg med kommentarer och diskussion här.
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Leaning Against the Wind: Costs and Benefits, Effects on Debt, Leaning in DSGE Models, and a Framework for Comparison of Results
“Leaning Against the Wind: Costs and Benefits, Effects on Debt, Leaning in DSGE Models, and a Framework for Comparison of Results,” International Journal of Central Banking 13 (September 2017) 385-408. CEPR DP 12226, NBER WP 23745.
Abstract:
The simple and transparent framework for cost-benefit analysis of leaning against the wind (LAW) in Svensson (JME 2017) and its main result are summarized. The analysis of the policy-rate effects on debt in Bauer and Granziera (IJCB 2017) does not seem to contradict that the effects may be small and of either sign. The analysis of LAW in DSGE models is complicated and the results of Gerdrup et al. (IJCB 2017) may not be robust. The Svensson (JME 2017) framework may allow comparison and evaluation of old and new approaches and their results. As an example, it is shown that these three papers result in very different marginal costs of LAW and that a realistic policy-rate effect on unemployment is crucial.
JEL Codes: E52, E58, G01
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Leaning Against the Wind: The Role of Different Assumptions About the Costs
“Leaning Against the Wind: The Role of Different Assumptions About the Costs,” August 2017. Continue reading
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New publication: “Cost-Benefit Analysis of Leaning Against the Wind”
Update, August 2017: “Cost-Benefit Analysis of Leaning Against the Wind,” published in Journal of Monetary Economics 90 (2017) 193-213.
The first version, under the title “Cost-Benefit Analysis of Leaning Against the Wind: Are Costs Larger Also with Less Effective Macroprudential Policy?”, was published as IMF Working Paper WP/16/3, January 2016.
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Englund and Svensson reject Riksbank’s proposal for target variable and variation band
Consultation response to the Riksbank’s memorandum “Change of target variable and introduction of variation band”
Peter Englund and Lars E.O. Svensson, Stockholm School of Economics pdf Swedish Ekonomistas
The Riksbank’s proposal for a change of target variable and the introduction of a variation band is rejected. There is no urgent need for these changes now, and it is inappropriate to forestall the parliamentary committee that currently reviews the monetary policy framework, including the issue of the choice of target variables and a possible variation band. The proposal for introduction of a variation band is specifically rejected. It does not serve any purpose and can, in practice, create a significant ambiguity about the inflation target, result in less effective anchoring of inflation expectations, and make it more difficult both to evaluate the Riksbank’s target achievement and to hold the Riksbank accountable for fulfilling the monetary policy goals. Continue reading
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Remissvar på Riksbankens PM om “Byte av målvariabel och introduktion av variationsband”
Peter Englund och Lars E.O. Svensson, Handelshögskolan i Stockholm pdf English Ekonomistas
Riksbankens förslag om byte av målvariabel och introduktion av ett variationsband avstyrks. Det finns inte något akut behov av dessa förändringar nu och det är olämpligt att föregripa den parlamentariska kommitté som gör en översyn av det penningpolitiska ramverket som bl.a. innefattar valet av målvariabel och eventuellt variationsband. Förslaget om introduktion av ett variationsband avstyrks speciellt. Det fyller inte någon funktion och kan i praktiken skapa en betydande oklarhet om penningpolitikens mål, ge ett sämre ankare för inflationsförväntningarna samt försvåra såväl en utvärdering av måluppfyllelsen som ett ansvarsutkrävande av Riksbanken. Continue reading
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New revision: “Cost-Benefit Analysis of Leaning Against the Wind”
Update, August 2017: “Cost-Benefit Analysis of Leaning Against the Wind,” published in Journal of Monetary Economics 90 (2017) 193-213.
The first version, under the title “Cost-Benefit Analysis of Leaning Against the Wind: Are Costs Larger Also with Less Effective Macroprudential Policy?”, was published as IMF Working Paper WP/16/3, January 2016.
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Vox column: Re-evaluating the result that the costs of ‘leaning against the wind’ exceed the benefits
Vox column: Re-evaluating the result that the costs of “leaning against the wind” exceed the benefits, January 24, 2017.
The IMF and the Federal Open Market Committee have both suggested that the costs of ‘leaning against the wind’ exceed the benefits. This Vox column responds to claims that the results of my research backing up this conclusion could be overturned. It argues that the alternative assumptions necessary to overturn the result are unrealistic, and that the finding that the costs of the policy exceed the benefits therefore seems to be robust.
The column summarizes “How Robust Is the Result That the Cost of “Leaning Against the Wind” Exceeds the Benefit? Response to Adrian and Liang.”
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How Robust Is the Result That the Cost of “Leaning Against the Wind” Exceeds the Benefit? Response to Adrian and Liang
Commentary on Monetary Policy and Financial Stability
“Commentary on Monetary Policy and Financial Stability” (slides), presented at “Challenges to Financial Stability in a Low Interest Rate World,” Annual International Journal of Central Banking Research Conference, Federal Reserve Bank of San Francisco, November 21-22, 2016
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Discussion text of Kocherlakota, “Rules versus discretion: A reconsideration”
The text is now available of my Comment on “Rules versus Discretion: A Reconsideration,” by Narayana Kocherlakota, Brookings Papers on Economic Activity, Fall 2016, 41-48.
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Panel presentation: Should monetary policy take financial-stability considerations into account at the ELB?
“Should Monetary Policy Take Financial-Stability Considerations into Account at the ELB?”, panel presentation (slides) at the First ECB Annual Research Conference, “Monetary Policy and Financial Stability in a Low Interest Rate Environment,” Frankfurt, September 28-29, 2016.
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Discussion of Gelain, Lansing, and Natvik: “Leaning against the credit cycle”
Discussion (slides) of Gelain, Lansing, and Natvik: “Leaning against the credit cycle,” Swiss National Bank Research Conference “New Perspectives on the role, instruments and effects of monetary policy,” Zurich, September 23-24, 2016.
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Discussion of Kocherlakota, “Rules versus discretion: A reconsideration”
Discussion (text, slides) of Kocherlakota, “Rules versus Discretion: A Reconsideration,” Brookings Papers on Economic Activity, Fall 2016 Conference, Washington, DC, September 15-16, 2016.
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