Category Archives: Comments, discussions

Svar på Goodfriend och Kings utvärdering av Riksbankens penningpolitik 2010-2015

Remissvar på Goodfriend och Kings utvärdering av Riksbankens penningpolitik (English summary)

Jag instämmer i utredarnas kritik att Riksbanksmajoriteten med en problematisk strategi fört en för stram penningpolitik efter 2011 och medvetet ha utnyttjat överoptimistiska inflationsprognoser för att motivera en högre ränta. Jag avvisar utredarnas påstående att majoritetens stora penningpolitiska åtstramning 2010-2011 skulle varit rimlig i ljuset av tillgänglig information och återhämtningen efter krisen. Jag avvisar också utredarnas påstående att minoriteten i det stora hela skulle ha godtagit åtstramningen, eftersom den vid varje möte röstade för en måttligt lägre ränta och räntebana. Minoriteten följde en enkel och robust handlingsregel. Enligt denna skulle ränta och räntebana sänkas ett steg vid varje möte så länge som inflationsprognosen låg under målet och arbetslöshetsprognosen låg över arbetslöshetens långsiktigt hållbara nivå. Detta framkommer tydligt i protokoll och tal. Minoritetens lägre ränta och räntebana var således bara det första steget, inte det enda steget, mot en väl avvägd penningpolitik. Utredarnas rekommendationer kommenteras utförligt i mitt remissvar, men jag ser inte att deras rekommendationer skulle lösa problemen med den svenska penningpolitiken. För att lösa problemen bör Finansutskottet förtydliga Riksbankens i Riksbankslagen och dess förarbeten formulerade mandat till att vara prisstabilitet och full sysselsättning, stärka den demokratiska kontrollen av Riksbanken samt ytterligare klargöra Sveriges genomtänkta ansvarsfördelning för makrotillsyn.  Continue reading

Response to Goodfriend and King’s review of Riksbank monetary policy 2010-2015

Consultation response (in Swedish) (Swedish summary)

I agree with Goodfriend and King’s criticism that the Riksbank majority, because of concerns about household debt, pursued too tight monetary policy after 2011 and deliberately used over-optimistic inflation forecasts to justify a higher policy rate. I reject Goodfriend and King’s claim that the majority’s large monetary tightening 2010-2011 was justified in the light of available information and the recovery after the crisis. I also reject Goodfriend and King’s claim that the tightening 2010-2011 was broadly accepted by the minority (Karolina Ekholm and me), because we at each policy meeting only voted for a moderately lower policy interest rate and policy-rate path.The minority followed a simple and robust policy rule. According to this, the policy rate and policy-rate path should be lowered one step at each meeting, as long as the inflation forecast was below the target and the unemployment forecast was above the long-run sustainable unemployment rate. This is clear from the minutes and speeches. The minority’s lower policy rate and policy-rate path at each policy meeting was thus just the first step, not the only step towards a well-balanced monetary policy. Goodfriend and King’s recommendations are commented in more detail in my consultation response, but I do not see that their recommendations would solve the problems with Swedish monetary policy. In order to solve the problems the Finance Committee should clarify that the Riksbank’s mandate, as formulated in the Riksbank Act and its preparatory works, is price stability and full employment. The Finance Committee should also strengthen the democratic control of the Riksbank and further clarify assignment of responsibilities in the current well thought-out framework for macroprudential policy.  Continue reading

Discussion of Turner, “The Case for Monetary Finance – An Essentially Political Issue”

Discussion (slides) of Adair Turner, “The Case for Monetary Finance – An Essentially Political Issue,” at the 16th IMF Annual Research Conference, “Unconventional Monetary and Exchange Rate Polices,” November 5-6, 2015, IMF, Washington, DC.
Video (my discussion starts 25 minutes into the session).

A more rigorous and analytical treatment of the issue is available in this paper by Willem Buiter.

Discussion 2 of Ajello, Laubach, López-Salido, and Nakata, “Financial stability and optimal interest-rate policy”

A second discussion (slides) of the paper “Financial Stability and Optimal Interest-Rate Policy” by Andrea Ajello, Thomas Laubach, David López-Salido, and Taisuke Nakata, Federal Reserve Board, at the conference “Monetary Policy Lessons from the Financial Crisis,” Swiss National Bank Research Conference, September 24-26, 2015.
A previous (and different) discussion of this paper is here.

Discussion of “Inflation targeting does not anchor inflation expectations”

Discussion (text) of “Inflation targeting does not anchor inflation expectations: Evidence from firms in New Zeland” by Saten Kumar, Hassan Afrouzi, Olivier Coibion, and Yuriy Gorodnichenko at the Fall 2015 Brookings Panel on Economic Activity, Washington, DC, September 10-11, 2015. Published in Brookings Papers on Economic Activity, Fall 2015, 212-219.

Discussion of Ajello, Laubach, López-Salido, and Nakata, “Financial stability and optimal interest-rate policy”

Discussion (slides) of the paper “Financial Stability and Optimal Interest-Rate Policy” by Andrea Ajello, Thomas Laubach, David López-Salido, and Taisuke Nakata, Federal Reserve Board, at the conference “The New Normal for Monetary Policy,” Federal Reserve Bank of San Francisco, March 27, 2015.
A later (and different) discussion of this paper is here.

How to weigh unemployment relative to inflation in monetary policy?

How to weigh unemployment relative to inflation in monetary policy?“, panel discussion at Fulfilling the Full Employment Mandate, the 57th Economic Conference at the Federal Reserve Bank of Boston, April 12-13, 2013.  Journal of Money, Credit and Banking, Supplement to Vol. 46, No. 2 (October 2014), 183-188.
Correction: Page 186, 3rd paragraph, 2nd line and 4th paragraph, 2nd line: Should be “…above a long-run sustainable rate” instead of “…below a long-run sustainable rate.”