How Tolerant Should Inflation-Targeting Central Banks Be? Selecting the Proper Tolerance Band : Lessons from Sweden

Should an inflation-targeting central bank have an explicit tolerance band around its inflation target? This paper provides an answer derived from the Swedish experience. The Riksbank is exceptional in the sense that it first adopted and later abolished an explicit band and is currently considering bringing it back. We conclude that the band should be explicit for several reasons. Most important, an inflation-targeting central bank should be open and transparent to the public regarding its actual ability to control inflation. We discuss how a numerical measure of the proper width of the band can be constructed to foster communication and credibility

Irish GDP between the Famine and the First World War : Estimates Based on a Dynamic Factor Model

A major issue in Irish economic history is the lack of historical national accounts before the interwar period. This paper addresses the gap with new annual estimates of real GDP between 1842 and 1913 using an indirect estimation technique based on a set of macroeconomic variables and a dynamic factor model. Three major results emerge from the data. First, per capita growth was faster in this period than anywhere in Europe. Second, aggregate output contracted by more than a third during the Great Famine of the 1840s, but had recovered its level and closed the output gap by the end of the decade. Third, the volatility of the business cycle fell by nearly three quarters in the second half of the sample

Comprehension, mapping and reporting of climate-related risks among listed firms in Sweden

We study the comprehension, mapping, and reporting of climate-related risks among firms listed on the NasdaqOMX stock exchange in Stockholm. Our study contains two parts: i) a study on the firms’ external communication through their annual reports, sustainability reports and webpages, and ii) a follow-up survey addressed to each firm’s management team. We find that firms are likely to engage in some form of mapping and reporting of climate-related risks. However, their comprehension of the nature of these risks, underlying problems, and what a climate transition implies varies across firms and industries. There are also substantial variations in the method employed to map and report climate- related risks. Our results further suggest that firms use the Task Force on Climate-related Financial Disclosures’ recommendations (TCFD) on how to map and report climate risks as a learning tool to improve their climate-risk management. However, as a voluntary initiative it is insufficient to generate substantial change. Consequently, policymakers should focus on improving firms’ comprehension of what constitutes a climate-risk, how to map such risks and how to report them. The mapping and reporting of climate-related risk may otherwise prove an inefficient tool to redirect and accelerate investments promoting a low-carbon and climate-resilient economy

GDP, not the Bond Yield, should Remain the Anchor of the EU Fiscal Framework

Declining bond yields and rising public debts have caused many economists to suggest raising the debt ceiling in the EU’s Stability and Growth Pact. Implicitly, they argue for replacing GDP as the anchor with the bond yield. We discuss the risks of such a shift. While such a change would provide short-term relief to highly indebted EU member states, it is based on the expectation that bond yields will remain low for the foreseeable future. The historical record, however, suggests that prolonged periods of low real bond yields are eventually replaced by periods of high real bond yields. And this phase may have already started. From a long-term sustainability perspective, we conclude that GDP serves as a better long-term anchor for the EU fiscal framework than the bond rate

Ny finansiell miljö – hur möter Riksbanken de nya utmaningarna?

Nationalekonomiska Föreningens förhandlinga

Frivillig anpassning eller tvingande restriktioner? : Överdödligheten, pandemibekämpningen och den ekonomiska utvecklingen i Europa under 2020

To reduce the spread of the Covid19 virus, governments have imposed far reaching restrictions on citizens’ mobility. These restrictions are associated with large social, economic, and democratic costs. In this article, I discuss whether it is possible to limit the economic costs by relying more on voluntary than mandated social distancing without causing the excess death rate to increase significantly. Based on data from Europe during 2020, I show that i) voluntary social distancing is higher in places with large infection rates, ii) the marginal benefit of additional restrictions on the excess death rate is small, and iii) the economic cost increases rapidly with additional restrictions. I conclude that the importance of voluntary social distancing should not be underestimated. More voluntary than mandatory social distancing may reduce the economic costs without increasing the excess death rate

Lunds universitets remissyttrande över Karnit Flug och Patrick Honohan Utvardering av Riksbankens penningpolitik 2015-2020. (Rapport från riksdagen 20211222 RFR4).

Lunds universitets remissyttrande över Karnit Flug och Patrick Honohans utvärdering av Riksbankens penningpolitik 2015-2020. Författat av Lars Jonung och Fredrik N G Andersso

Det finanspolitiska ramverket efter coronapandemin

Syftet med denna rapport är att diskutera om Sverige bör överge det nuvarande ramverkets regler och följa med i den internationella trenden med kraftigt ökad offentlig skuldsättning. Vårt svar är nej. Argumenten för att överge det nuvarande ramverket är svaga. Vi får inte glömma att ramverket bidragit till årtionden av ekonomisk stabilitet i Sverige – inte minst nu under coronakrisen. Eventuella reformer av ramverket bör istället förstärka snarare än försvaga det

Riksbanken och inflationen 1995-2012 - missar Svensson målet?

Vi granskar den uppmärksammade kritik som Lars E O Svensson riktat mot Riksbankens penningpolitik. Vi har en rad invändningar. Svensson har ett för snävt synsätt när han bedömer om Riksbanken har uppfyllt sitt inflationsmål. Hans ekonometriska resultat, vilka utmynnar i slutsatsen att Riksbankens politik gett 38 000 fler arbetslösa per år under 1997−2011, är inte robusta. De vilar på en alltför enkel modell och på ett orealistiskt antagande om konstanta inflationsförväntningar. Om vi anlägger ett längre perspektiv än Svenssons, så framstår inflationsmålspolitiken som framgångsrik jämfört med övriga penningpolitiska regimer under 1900-talet

Den svaga kronan beror på Riksbanken

Riksbanken måste sluta experimentera med svensk ekonomi och återgå till en penningpolitik som ger långsiktig makroekonomisk stabilitet, skriver nationalekonomerna Fredrik NG Andersson och Lars Jonung