Bloomberg, October 31, 2014: “Central Banker Hero Becomes Face of Failure in Swedish Tale“
Editorial in Financial Times, October 30, 2014.
Bloomberg, October 29, 2014: “How Sweden Joined Central Banking’s Hall of Shame.”
New interview in Bloomberg: “Riksbanker who left in protest says untried steps only hope,” October 27, 2014.
I have given a series of lectures in Tirana, Albania, on October 20-22, 2014. They are available here.
In a detailed interview with the News Agency Direkt, then Riksbank Deputy Governor Karolina Ekholm reveals how the Riksbank’s judgmental adjustments of the model forecasts have given the Riksbank’s inflation forecasts an upward bias. She also points out that I warned about this upward bias and explicitly entered reservations about the inflation forecast from december 2012. It was thus not a secret at the Riksbank that there were problems with the forecast. Continue reading
New Ekonomistas post. This is an English translation.
As is well known, the Riksbank frequently publishes a figure of the debt-to-income ratio, that is, household debt as a percentage of disposable income. But the debt-to-income ratio is an unsuitable risk measure, since it at a closer look hardly gives any information about any risks with household debt. Among aggregate risk measures, the interest-to-income ratio, that is, household interest payments as a percentage of disposable income, is a better measure, since a low interest-to-income ratio indicates good payment capacity and resilience against interest-rate increases. The debt-to-assets ratio, that is, household debt as a percentage of total assets, is also a better risk measure, since a low debt-to-assets ratio means a high net worth-to-assets ratio and high resilience against a fall in asset values. In order to present the best possible information and to avoid giving a misleading impression, figures of these measures should be published instead. If one still insists on publishing the debt-to-income ratio, on should always also publish the better measures, the interest-to-income and debt-to-total-assets ratios. Continue reading