Category Archives: Interviews

Interview in Global Housing Watch Newsletter

Interview with Lars E.O. Svensson,” in Global Housing Watch Newsletter, March 30, 2015, where I answer the following questions:

  1. The need to keep monetary policy rates low to support an ailing economy, but at the same time, manage a boom in the housing market—that’s the scenario in which many policymakers around the world find themselves in. How should policymakers approach this type of scenario?
  2. Can monetary policy be used to manage problems associated with a housing boom?
  3. How can policymakers assess whether household debt poses a problem?
  4. So, if monetary policy is not suitable, how can any problems with household debt be handled?

Misleading statement in interview with Kenneth Rogoff in Svenska Dagbladet

In an interview today, April 16, in Svenska Dagbladet, Kenneth Rogoff is quoted as saying (my translation from Swedish):

“I know that there are commentators, such as Lars EO Svensson, who don’t believe that debt is affected by interest rates.”

It is wrong to say that I would believe that debt is not affected by interest rates. Instead, some of my work has dealt with precisely how monetary policy affects household indebtedness. For instance, this paper deals with how monetary policy affects real debt and the debt-to-GDP ratio.

My view, and the result of the Riksbank’s own calculations (se here and here), is that the impact of monetary policy on household real debt and debt ratios in Sweden is normally very small (and may even be of either sign). The impact on any risks associated with household debt is negligible. Therefore, monetary policy in Sweden should focus on the traditional objectives of monetary policy, namely to stabilize inflation around the inflation target and unemployment around a long-run sustainable rate.