Monthly Archives: November 2014

Panel introduction: Monetary policy tradeoffs in CESEE

What can monetary policy achieve and what is the relation between monetary policy and financial stability,” in Nowotny, E., Ritzberger-Grünwald, D. and Schuberth, H. (eds) (2015), The Challenge of Economic Rebalancing in Europe. Perspectives for CESEE Countries, Edward Elgar, chapt. 13, 177-183.. 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.

Major differences between the majority and minority of the Riksbank Executive Board

English translation of Ekonomistas blog in Swedish.

There has been a somewhat odd discussion about how much the majority and minority of the Riksbank Executive Board actually differed with regard to monetary policy from the summer of 2010 when the interest rate increases began. For instance, it has been claimed that I just wanted to have a marginally lower policy rate than the majority and that I wanted to raise rates almost as fast as the majority. But these claims have missed the fact that my policy-rate paths were only the first step towards a better monetary policy, not the only step. Above all, they have missed the fact that there were large  principle differences between the majority and minority on how to conduct monetary policy. In this post I explain my reasoning, the policies my line of reasoning would have led to if I had had the majority with me, and how instead the majority came to turn monetary policy upside down.  Continue reading

Does a trivial econometric error explain why Andersson and Jonung get different results?

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 (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 it is their estimates of the Phillips curve that are unreliable, not mine. See this note.

(A previous response in English to their criticism is available here.)

Lars Jonung and the truth

Update November 20, 2014:                                                    English translation of new Ekonomistas post.
A closer look reveals that the different results of Anderson and Jonung are due to a trivial econometric error.

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