“The deceptive debt ratio,” a report by Evidens scrutinizing the Riksbank’s assertions about the Swedish housing market, September 2015. English Swedish
Op-ed in Dagens Nyheter, September 26, 2015. Swedish only
Monetary policy should stick to its core mandate of price stability, and should deviate from its traditional role only if the benefits to the economy outweigh the costs, according to a new study from the International Monetary Fund, “Monetary Policy and Financial Stability.”
The question is whether monetary policy should be altered to contain financial stability risks. Should it lend a hand by temporarily raising interest rates more than warranted by price and output stability objectives?
Based on our current knowledge, and in present circumstances, the answer is generally no.
An interview of me by IMF Survey.
- Monetary policy is not suitable for managing housing booms and rising household debt
- Not all housing booms pose a problem
- Identifying problem cases requires deep and complex analysis
Matthew Klein has published an FT Alphaville post with many errors, “Sweden’s inflation record is less interesting than you think.” Its main point is that “the harshest criticisms [of the Riksbank] seem to be unjustified” and that “A reevaluation of the Riksbank’s recent record looks to be in order.” But the post’s reasoning and conclusion do not stand up to scrutiny. Continue reading
Paul Krugman has a post on self-justifying Swedes.
In an interview in Bloomberg, Riksbank Deputy Governor Per Jansson again tries to defend the indefensible, the Riksbank’s sharp tightening of monetary policy in the summer of 2010. From the summer of 2010 to the summer of 2011, the Riksbank majority increased the policy rate from 0.25 percent to 2 percent. Continue reading
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.
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
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.)
“Riksbanken kan inte upprätthålla finansiell stabilitet genom att debattera” (in Swedish), 2nd reply to Carl B. Hamilton on di.se, the website of Dagens Industri. Also on Ekonomistas (in Swedish, with links).
Carl B. Hamilton seems to think that the Riksbank by op-eds, analyses and discussions in the new Financial Stability Council has sufficient instruments to affect financial stability to warrant financial stability as an objective. But the Council is only a forum for discussions and cannot make decisions. Since the Riksbank has no decision power over micro- and macroprudential instruments (that power is with Finansinspektionen, the Swedish FSA), the Riksbank cannot be accountable for financial stability and not have financial stability as an objective. Continue reading
(English translation of an article of mine on the website of the Swedish business newspaper Dagens Industri, July 21, 2014.)
Should the Riksbank have financial stability as an objective besides price stability? According to an op-ed by Carl B. Hamilton in Dagens Industri on July 17, the answer is yes. According to Hamilton, this is even a practice already established by the Riksdag (the Swedish parliament). The Riksbank Act needs to be amended, but only as a formality.
But Hamilton forgets that the Riksbank has no effective policy instruments to affect financial stability, except in connection with the management of financial crises. He also forgets that the government with the support of seven parties in the Riksdag – including Folkpartiet (the Liberal Party) – has decided that the Riksbank will not receive any such instruments. Without the instruments, the Riksbank neither can nor should have financial stability as an objective. Continue reading
(Debattartikel publicerad under rubriken “Inga medel, därför inget mål” på Dagens Industris websida 2014-07-21.)
Ska Riksbanken ha finansiell stabilitet som mål vid sidan av prisstabilitet? Enligt Carl B Hamiltons debattartikel i Dagens Industri den 17 juli är svaret ja. Det är till och med en av riksdagen redan etablerad princip, hävdar Hamilton. Riksbankslagen behöver ändras, men bara som en formalitet.
Men Hamilton glömmer att Riksbanken saknar effektiva medel att påverka den finansiella stabiliteten, utom i samband med hanteringen av finansiella kriser. Han glömmer också att regeringen med stöd av sju partier i riksdagen – inklusive Folkpartiet – beslutat att Riksbanken heller inte ska tilldelas några sådana medel. Utan medel varken kan eller bör Riksbanken ha finansiell stabilitet som mål. Continue reading
The Economist writes about Swedish monetary policy in its latest issue: “Subzero conditions – interest rates are back at crisis lows.”