Riksbank monetary policy decisions (separate page)
Consultation response to the Riksbank’s proposal for target variable and variation band (with Peter Englund), June 2017.
“How Robust Is the Result that the Cost of ‘Leaning Against the Wind’ Exceeds the Benefit? Response to Adrian and Liang,” working paper, January 2017. CEPR Discussion Paper DP11744. ECB Working Paper No. 2031/February 2017. Vox column.
“The Recent Swedish Experience of Monetary Policy and Macroprudential Policy,” slides presented at Riksrevisionen (The Swedish National Audit Institution), Stockholm, August 30, 2016.
“Monetary Policy, Financial Stability, and Life at the IMF,” interview in IMF Research Bulletin, June 2016.
“The Recent Swedish Experience of Monetary Policy and Macroprudential Policy,” slides presented at Finansbolagens informationsmöte, Grand Hotel, Stockholm, May 20, 2016.
Discussion (slides) of Filardo and Rungcharoenkitkul, “Quantitative case for leaning-against-the-wind,” CCBS Research Forum on Macro Finance, Bank of England, London, May 26-27, 2016.
“The Rationale for Macroprudential Policy,” slides for opening speech at the First Annual ECB Macroprudential Policy and Research Conference, April 26-27, 2016.
Background paper 1. “Monetary policy and macroprudential policy: Different and separate.”
Background paper 2. “Cost-Benefit Analysis of Leaning Against the Wind : Are Costs Larger Also with Less Effective Macroprudential Policy?“
“Amortization Requirements May Increase Household Debt : A Simple Example,” IMF Working Paper No. 16/83, April 2016.
Goodfriend and King’s review of Riksbank monetary policy:
– Two serious mistakes in the Goodfriend and King review of Riksbank monetary policy
– Goodfriend and King misreport the monetary policy stance of the minority
– Response to Goodfriend and King’s review of Riksbank monetary policy 2010-2015
– Svar på Goodfriend och Kings utvärdering av Riksbankens penningpolitik 2010-2015
– Questions to Goodfriend and King, King’s (misleading) reply, and my response
“Cost-Benefit Analysis of Leaning Against the Wind,” Journal of Monetary Economics 90 (2017) 193-213. CEPR Discussion Paper DP11739, NBER Working Paper No. 21902. A previous version, with the longer title “Cost-Benefit Analysis of Leaning Against the Wind: Are Costs Larger Also with Less Effective Macroprudential Policy?”, was published as IMF Working Paper WP/16/3, January 2016. Vox column. Data and Matlab program.
Panel discussion, “Optimal Design for Monetary Policy in the Post Crisis Period” (slides), at the conference “Monetary Policy Implementation and Transmission in the Post-Crisis Period,” Federal Reserve Board, Washington, DC, November 12-13, 2015.
Excel sheet used in slide 5 for the simple example of a cost-benefit analys of leaning against the wind.
“Monetary policy and macroprudential policy: Different and separate,” paper (revised February 2016) and slides presented at the conference “Macroprudential monetary policy,” Federal Reserve Bank of Boston’s 59th Economic Conference, Federal Reserve Bank of Boston, October 2-3, 2015. Forthcoming in Canadian Journal of Economics.
Excel sheet used in slide 21 for the simple example of a cost-benefit analys of leaning against the wind.
“Discussion 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 (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. Brookings Papers on Economic Activity, Fall 2015, 212-219.
“Cost-benefit analysis of leaning against the wind,” presentation at the AQR Institute of Asset Management event Perspectives: Unprecedented Monetary Policy Intervention, London Business School, London, June 25, 2015.
Previous version presented at the Bank of England-Hong Kong Monetary Authority-International Monetary Fund conference on Monetary, Financial and Prudential Policy Interactions in the Post-Crisis World held at Bank of England, London, June 16-17, 2015.
“How best to manage a housing boom: Interview by IMF Survey,” interview, June 15, 2015.
– 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
“A simple cost-benefit analysis of using monetary policy for financial-stability purposes,” in Blanchard, Olivier J., Raghuram Rajan, Kenneth S. Rogoff, and Lawrence H. Summers, eds., Progress and Confusion: The State of Macroeconomic Policy, MIT Press, 2016.
“Financial-stability policy – The Swedish experience,” presentation at the Seminar on Financial Stability Committees: Lessons from Early Experiences for Latin America, Central Reserve Bank of Peru, Lima, April 28, 2015.
“Mortgage contract design, monetary policy, and financial stability,” presentation in a panel at the conference Mortgage Contract Design: Implications for Households, Monetary Policy and Financial Stability, Federal Reserve Bank of New York, May 20-21, 2015. Program with papers and slides.
“Monetary policy and financial stability,” keynote speech at the conference “Financial Liberalization, Innovation, and Stability: International Experience and Relevance for China,” Third Joint Conference, People’s Bank of China and International Monetary Fund, Beijing, March 16, 2015. Text, slides.
“Negative Interest Rates: Helpful or Harmful?” Interview in Top of Mind, Issue 32, February 27, 2015, Goldman Sachs.
“Forward guidance,” International Journal of Central Banking 11 (September 2015), Supplement 1, 19-64. Abstract. Paper.
Appendix: Slides for Sweden Feb 2007-Sep 2014, New Zealand Mar 2004-Mar 2014, U.S. Jan 2012-Mar 2017 (updated).
“Felaktig beskrivning av debatten om bostadspriserna, skulderna och penningpolitiken” (“Erroneous description of the debate about housing prices, debt, and monetary policy,” in Swedish), Ekonomisk Debatt 1/2015, 49-51.
“Penningpolitik och full sysselsättning” (“Monetary Policy and Full Employment”, in Swedish), background paper for LO’s project Full sysselsättning och solidarisk lönepolitik (Full employment and solidaric wage policy), December 2014.
“Inflation Targeting and Leaning Against the Wind,” South African Reserve Bank (2015), Fourteen Years of Inflation Targeting in South Africa and the Challenge of a Changing Mandate: South African Reserve Bank Conference Proceedings 2014. Pretoria: South African Reserve Bank, 19-36.
A previous version, “Why Leaning Against the Wind Is the Wrong Monetary Policy for Sweden,” was presented at the NBER 25th Annual East Asian Seminar on Economics, Unconventional Monetary Policy, Tokyo, June 20-21, 2014. Vox column.
A shorter version, “Inflation Targeting and Leaning Against the Wind,” was published in International Journal of Central Banking (June 2014) 103-114.
“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, chapter 13, 177-183.
Comments on Bordo and Siklos “Central Bank Credibility: An Historical and Quantitative Exploration,” at Norges Bank Conference “Of the Uses of Central Banks: Lessons from History,” Oslo, June 5-6, 2014.
“Riksbanken, måluppfyllelsen och den demokratiska kontrollen” (“The Riksbank, the target achievement, and the democratic control,” in Swedish), Ekonomisk Debatt 4/2014, 54-66.
“Monetary policy and financial-stability policy are different and normally best conducted independently,” in Monetary Policy in a Changing Financial Landscape, ECB Forum on Central Banking, Sintra, Portugal, May 25-27, 2014, page 81-89.
Interview in Svenska Dagbladet, May 23, 2016 (in Swedish).
“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.”
Bloomberg interview, April 13, 2016.
“De senaste årens penningpolitik – ‘leaning against the wind'” (“Monetary policy during the last few years – leaning against the wind,” in Swedish), Ekonomisk Debatt 3/2014, 6-24. Paper.
“Resilience, Debt, and Net Worth: Has Resilience Increased with Higher Debt-to-Income Ratios?” January 2014. Paper.
”’Leaning against the wind’ increases (not reduces) the household debt-to-GDP ratio,” revised November 2013. Paper.
“Leaning Against the Leaners,” Central Banking 24-2 (November 2013) 27-36. Paper.
“The Effect of Housing Prices of Changes in Mortgage Rates and Taxes,” August 2013. Paper.
“Some Lessons from Six Years of Practical Inflation Targeting,” Sveriges Riksbank Economic Review 2013:3, 29-80.
I enter a reservation against the Account of monetary policy in 2012, because I consider the account to be incomplete and in several respects misleading and thus it does not offer an adequate basis for an assessment of the Riksbank’s monetary policy. Read more (English Swedish)
Target attainment is currently poor, since inflation is way below the inflation target and unemployment is way above a reasonable long-run sustainable rate. An important issue is whether target attainment could have been better with a more expansionary monetary policy, but a thorough analysis of this issue is missing in the account. That monetary policy has not been more expansionary is, as far as can be judged, because it has to a great extent been conducted for the purpose of limiting household debt. However, extensive research and several inquiries show quite unequivocally that the policy rate has little effect on the household debt ratio. The fact that this is the case is not indicated in the account. A more expansionary monetary policy with an unchanged low policy rate since 2010 would according to a preliminary calculation have held CPIF inflation close to the target, led to much lower unemployment and led to an insignificantly higher debt ratio in the short term, while not affecting the debt ratio in the long term. Read more (English Swedish)
Reservation (English) Reservation (Swedish) Account of monetary policy 2012 (English) Redogörelse för penningpolitiken 2012 (Swedish)
- “Does a trivial econometric error explain why Andersson and Jonung get different results?” November 2014.
- “Lars Jonung and the truth,” November 17, 2014
- Reply to Jonung and Andersson (in Swedish)
- Comment on Söderström and Vredin.
“Monetary Policy and Employment: Monetary Policy Is Too Tight” (“Penningpolitiken och sysselsättningen: penningpolitiken alltför stram“), speech at The Swedish Trade Union Confederation, LO, Stockholm, January 16, 2013. English Swedish.Summary video (in Swedish).
Reservation by Deputy Governors Karolina Ekholm and Lars E.O. Svensson Against Riksbank Decision to Increase Its Foreign Exchange Reserves, December 6, 2012. English Swedish. Riksbank announcement. Editorial by Peter Wolodarski, Dagens Nyheter, December 16, 2012 (Swedish).
Vi reserverar oss mot beslutet att förstärka valutareserven med motsvarande 100 miljarder kronor, eftersom vi anser att ett bättre alternativ är att ingå ett avtal med Riksgäldskontoret om att valutareserven ska återställas inom 10 bankdagar efter beslut om att ta den i anspråk för likviditetsstöd. Ett sådant avtal har fördelen att skattebetalarna slipper betala för bankernas riskfyllda upplåning i utländsk valuta.
We enter a reservation against the decision to reinforce the foreign exchange reserves by the equivalent of SEK 100 billion, as we consider a better alternative would be to enter into an agreement with the Swedish National Debt Office that the foreign exchange reserves will be restored within 10 banking days after a decision has been made to use the reserves for liquidity assistance. Such an agreement would have the advantage that the taxpayers would not need to pay for the banks’ risky borrowing in foreign currencies.
“Monetary Policy and Financial Stability,” presentation at Centre for Monetary Economics, BI Norwegian Business School, Oslo, Norway, November 7, 2012. Slides.
“What is the Executive Board’s View of the Monetary Policy?” (“Hur ser direktionens på penningpolitiken?”, in Swedish), minutes from the Swedish Economics Association’s (Nationalekonomiska föreningens) meeting at the Stockholm School of Economics, May 11 2012, Ekonomisk Debatt 6/2012, 74-95. Swedish.
“Unemployment Gaps: Notes on Blanchard and Gali (2010),” research notes, July 2012.
“My View of Monetary Policy,” introductory statement at the meeting of the Nationalekonomiska föreningen (the Swedish Economic Association) on “What Is the Executive Board’s View on Its Monetary Policy?”, Stockholm School of Economics, May 2012.English Swedish
“Discussion of Athanasios Orphanides and Volker Wieland ‘Complexity and Monetary Policy’,” International Journal of Central Banking 9, Supplement 1 (2013) 205-218. PDF.
“Challenges for the Riksbank – Monetary Policy and Financial Stability” (“Utmaningar för Riksbanken – penningpolitik och finansiell stabilitet,” in Swedish), Ekonomisk Debatt nr 5 2012, årgång 40, 17-29. Swedish. (Background Félix Neubergh Lecture 2011, University of Gothenburg, November 17, 2011. English.)
“Discussion of Valentina Bruno and Hyun Song Shin, ‘Capital Flows and the Risk-Taking Channel of Monetary Policy’,” prepared for the 11th BIS Annual Conference, “The Future of Financial Globalization,” June 21-22, 2012, Lucerne. PDF.
“Comment on Michael Woodford, ‘Inflation Targeting and Financial Stability’,” Sveriges Riksbank Economic Review 2012:1, 33-39. PDF.
“Central-Banking Challenges for the Riksbank: Monetary Policy, Financial-Stability Policy, and Asset Management,” the Félix Neubergh Lecture 2011, University of Gothenburg, November 17, 2011. Full lecture. Summary English Swedish.
“Practical Monetary Policy: Why Has the Riksbank’s Policy-Rate Path Been So High, and Why Did this Not Prevent the Recovery?”, keynote lecture at the National Conference of Swedish Economists, Uppsala University, September 17, 2011. Summary: EnglishSwedish. Slides. Background paper (for the Brookings Panel on Economic Activity, Fall 2011, published in Brookings Papers on Economic Activity, Fall 2011, 289-332).
“Comments on Gerlach, Stefan, and Thomas Jordan, ‘Tactics and Strategy in Monetary Policy: Benjamin Friedman’s Thinking and the Swiss National Bank’,” given at Recent Developments in Monetary Policy, Fiscal Policy, and Financial System Design: A Conference Honoring Benjamin M. Friedman, International Journal of Central Banking 8, Supplement 1 (2012) 57-63. PDF.
“The Relation between Monetary Policy and Financial Stability Policy,” Recent Developments in Monetary Policy, Fiscal Policy, and Financial System Design: A Conference Honoring Benjamin M. Friedman, International Journal of Central Banking 8, Supplement 1 (2012) 293-295. PDF.
“Chasing the Perfect Interest Rate” (“På jakt efter den perfekta räntan”, in Swedish), interview in Tvärsnitt 2011:1, Vetenskapsrådet (the magazine Cross Section, the Swedish Research Council), March 31, 2011.
“Inflation Targeting and Financial Stability,” Policy lecture at the CEPR/ESI 14th Annual Conference on “How Has Our View of Central Banking Changed with the Recent Financial Crisis?”, hosted by the Central Bank of Turkey, Izmir, October 28, 2010. PDF.Slides.
“No Signs of Unsustainable House Prices” (in Swedish), interview in Svenska Dagbladet, December 28, 2010.
“Decision Maker Against the Stream” (in Swedish), interview in Affärsvärlden, December 1, 2010.
“Deputy Governor: The Policy Rate Is Too High” (in Swedish), interview in Svenska Dagbladet, September 27, 2010.
“The Duel: Increasing the Policy Rate – Now or Later?” (in Swedish, with Klas Eklund), Stock Magazine, 3/2010, Unga Aktiesparare, September 2010, PDF.
“Monetary Policy and Financial Markets at the Effective Lower Bound,” Journal of Money, Credit and Banking 42 (2010) Supplement 229-242. Revision, June 2010, of speech at the conference Financial Markets and Monetary Policy, Federal Reserve Board, June 4-5, 2009. PDF. Abstract.
“Price Stability and Financial Stability: The Responsibility of Central Banks,” speech at Swedbank, Stockholm, May 27, 2010, slides.
“Monetary Policy and Financial-Stability Policy,” speech at the conference “Financial Market Imperfections and Macroeconomics” held at the Federal Reserve Bank of San Francisco, March 5, 2010. Slides.
“Inflation Targeting after the Financial Crisis,” speech at the Reserve Bank of India’s International Research Conference, “Challenges to Central Banking in the Context of Financial Crisis”, Mumbai, February 12, 2010. English. Swedish. Published in Gokarn, Subir, ed., Challenges to Central Banking in the Context of Financial Crisis: The International Research Experience, Academic Foundation and Reserve Bank of India, 2011, 141-154.
“Policy Expectations and Policy Evaluations: The Role of Transparency and Communication,” Sveriges Riksbank Economic Review 1/2010, 43-78. A previous version was presented at at the conference Ten Years with an Independent Riksbank, Stockholm, September 11, 2009. PDF (English) PDF (Swedish). Abstract. Video.
“Comment on Drautzburg and Uhlig, ‘Fiscal Stimulus and Distortionary Taxation’,” presented at the conference “New Approaches to Fiscal Policy,” Federal Reserve Bank of Atlanta, January 8-9, 2010, slides.
“Flexible Inflation Targeting in the Light of the Crisis,” presentation at the Euro50 Group Meeting, Paris, November 19-20, 2009, slides.
“Monetary Policy,” lecture at Stockholm School of Economics, November 9, 2009, slides.
A lecture on modern monetary policy regimes, on the credibility of the repo-rate path, and on real-time evaluation of monetary policy with the help of mean squared gaps.
“Flexible Inflation Targeting: Lessons from the Financial Crisis,” speech at the workshop “Towards a New Framework for Monetary Policy? Lessons from the Crisis,” organized by the De Nederlandsche Bank, Amsterdam, September 21, 2009. English. Swedish.
“Sweden Official Seeks Price Targets”, interview with Dow Jones and Wall Street Journal, July 22, 2009, link (may require subscription).
“Monetary Policy at the ZLB in the Current Crisis,” panel presentation at the conference on Quantitative Approaches to Monetary Policy in Open Economies, Federal Reserve Bank of Atlanta, May 15-16, 2009. Slides.
“Evaluating Monetary Policy,” in Koenig, Evan F., Robert Leeson, and George A. Kahn, eds., The Taylor Rule and the Transformation of Monetary Policy, Hoover Institution Press, 2012, p. 245-274. (Update of speech on March 13, 2009.) PDF. Abstract.
The line: With a modified Taylor curve, the forecast Taylor curve, and plots of mean squared gaps showing the tradeoff between the variability of the inflation-gap and output-gap forecasts it is possible to evaluate policy ex ante, that is, taking into account the information available at the time of the policy decisions, and even evaluate policy in real time.
The line: When evaluating a flexible inflation-targeting regime, it is not enough to simply compare the outcome for inflation with the inflation target; it is necessary to evaluate the central bank’s decisions primarily on the basis of the information that was available when the decisions were made (ex ante).
Interview on SR International-Radio Sweden, February 18, 2009. Listen.
The line: Central banks have powerful policy options with a zero interest rate and can still stabilize inflation and the real economy.
“Optimal Monetary Policy,” keynote lecture at the Workshop on Optimal Monetary Policy, Norges Bank, November 21-22, 2008, slides.
The line: Optimal monetary policy can in theory be seen as equivalent to choosing an optimal policy function, but it can in practice better be seen as choosing an optimal projection of the instrument rate, inflation, and resource utilization in a set of feasible projections so as to minimize an intertemporal loss functin corresponding to central-bank objectives.
“Comments on Dale, Orphanides, and Österholm, ‘Imperfect Central Bank Communication: Information versus Distraction,” SNB Research Conference, September 19-20, 2008, slides.
The line: The paper’s argument against publishing central-bank forecasts requires the unlikely combination of (1) the central-bank forecast being much worse than the private-sector forecast and (2) the private-sector incorrectly believing the central-bank forecast is much better.
The line: Some personal views and reflections on transparency experiences and challenges following my first year as Deputy Governor at Sveriges Riksbank
“The Future of Inflation Targeting and the Present at the Riksbank,” discussion at the conference on International Experience with the Conduct of Monetary Policy under Inflation Targeting, Bank of Canada, July 22-23, 2008, slides.
The line: The present state of inflation targeting and management of interest-rate expectations at the Riksbank.
“Beyond Rational Expectations: Practical Policy Considerations — Comment on Sims,” discussion at the 7th BIS Annual Conference, June 26-27, 2008, slides.
The line: Three examples of management and analysis of expectations at the Riksbank.
“Monetary Policy at the Riksbank and the Phillips Curve,” presentation at the conference Understanding Inflation and the Implications for Monetary Policy, Federal Reserve Bank of Boston, June 9-11, 2008, slides, text. Published in Fuhrer, Jeff, Yolanda K. Kodrzycki, Jane Sneddon Little, and Giovanni P. Olivey,Understanding Inflation and the Implications for Monetary Policy: A Phillips Curve Retrospective, MIT Press, 2009, 433-444.
The line: Phillips curves are crucial in the Riksbank’s DSGE model Ramses, and Ramses is crucial in the monetary-policy decision process.
“Model Uncertainty and Monetary Policy at the Riksbank,” presentation at the conference on Recognizing and Coping with Macroeconomic Model Uncertainty in Designing Monetary Policy, Bank of Korea, Seoul, May 26-27, 2008, slides.
The line: Riksbank handles model uncertainty via informal model averaging and the use of judgment.
“Modern Monetary Policy,” presentation for Norwegian university teachers and students, Norges Bank, Oslo, March 6, 2008, slides.
The line: Some fundamental principles of modern monetary policy and basic aspects of flexible inflation targeting.
“Flexible Inflation Targeting and the Latest Interest-Rate Decision” (in Swedish), presentation at the Central Confederation of Trade Unions (LO), Stockholm, February 27, 2008, slides.
The line: Some fundamental principles for flexible inflation targeting and the motivations for the Riksbank’s latest decision about the interest-rate and the interest-rate path.
“Flexible Inflation Targeting and the Interest-Rate Path,” presentation at the Federal Reserve Bank of San Francisco, February 25, 2008, slides.
The line: Some fundamental principles for flexible inflation targeting and the Riksbank’s development of monetary policy by publishing its own interest-rate path.
Discussion of Roel Beetsma, “A Survey of the Effects of Discretionary Fiscal Policy,” presented at the conference on “Fiscal Policy and Labour Market Reforms” in Stockholm, January 29, 2008, slides.
“What Have Economists Learned about Monetary Policy over the past 50 Years?,” in Herrman, Heinz, ed., Monetary Policy Over Fifty Years: Experiences and Lessons, Routledge, 2009. PDF. Press release, September 2008.
The line: A personal view about the research on monetary policy that is most relevant to practical monetary policy, starting with Milton Friedman’s Presidential Address in December 1967.
“Monetary Policy,” lecture at Stockholm School of Economics, November 29, 2007, slides.
A lecture on modern monetary policy regimes: mandate, independence and accountability; monetary policy in Sweden; and flexible inflation targeting and the interest-rate path.
“Recent and Prospective Developments of Monetary Policy,” presentation at the Meeting for Nordic Central-Bank Economists, Stockholm, September 14, 2007; the Czech National Bank, Prague, June 28, 2007; and the conference on Inflation Targeting, Central Bank Independence and Transparency, Cambridge, UK, June 15-16, 2007. Slides.
The line: The standard theory of optimal monetary policy can be reconciled with the practice flexible inflation targeting by formulating forecast targeting as a choice of an optimal projection of inflation, resource utilization, and the instrument rate from a set of feasible projections that are given by the current state of the economy and the projection model, while taking determinacy and commitment issues into account.
The line: Some fundamental principles for flexible inflation targeting and the Riksbank’s development of monetary policy by publishing its own interest-rate path.
“Modern Monetary Policy Regimes: Mandate, Independence, and Accountability,” presentation at the ECPRD Meeting on Parliaments and Central Banks: A Vital Relationship, Stockholm, June 8-9, 2007. Slides.
The line: Modern monetary-policy regimes are built on three pillars: mandate, independence, and accountability.