Financial Crisis and Crisis Management in Sweden. Lessons for Today

This paper gives an account of the Swedish financial crisis covering the period 1985–2000, dealing with financial deregulation and the boom in the late 1980s, the bust and the financial crisis in the early 1990s, the recovery from the crisis and the bank resolution policy adopted during the crisis. The paper focuses on three issues: the causes and consequences of the financial crisis, the policy response concerning bank resolution, and the applicability of the Swedish model of bank crisis management for countries currently facing financial problems.financial crisis; crisis management; bank resolution; solvency crisis; banking crisis

To be or not to be in the euro? Benefits and costs of monetary unification as perceived by voters in the Swedish euro referendum 2003

The Swedish referendum in September 2003 on adopting the euro or keeping the domestic currency, the krona, represents a unique event to examine the public's perceptions of the benefits and costs of monetary unification. The voters chose between the two polar cases of exchange rate regimes: either a freely floating exchange rate or membership in a monetary union. Three major conclusions emerge from the analysis of the exit poll surveys gathered on the day of the referendum. First, the optimum currency area theory proves to be a constructive framework to predict voting behaviour across socio-economic groups and regions in Sweden, assuming voters behave in their self-interest. Second, the distribution of the expected benefits and costs across groups was a major determinant of their voting behaviour. As predicted by theory, the Yes-vote was strongest among voters employed in the tradable sector, in high growth regions as well as among high-income earners and well educated. The No-vote was strongest among voters employed in the non-tradable sector, in particular in the public sector, and among low-income earners, the unemployed and the less educated - in short, among groups dependent on public-sector transfers to maintain their living standards in the event of adverse economic shocks. Third, political attitudes towards the European integration process heavily influenced the views of the voters towards the euro.euro, optimum currency area, exchange rate regime, voting, referendum, sweden, Jonung

To be or not to be in the euro? Benefits and costs of monetary unification as perceived by voters in the Swedish euro referendum 2003

The Swedish referendum in September 2003 on adopting the euro or keeping the domestic currency, the krona, represents a unique event to examine the public’s perceptions of the benefits and costs of monetary unification. The voters chose between the two polar cases of exchange rate regimes: either a freely floating exchange rate or membership in a monetary union. Three major conclusions emerge from the analysis of the exit poll surveys gathered on the day of the referendum. First, the optimum currency area theory proves to be a constructive framework to predict voting behaviour across socio-economic groups and regions in Sweden, assuming voters behave in their self-interest. Second, the distribution of the expected benefits and costs across groups was a major determinant of their voting behavior. As predicted by theory, the Yes-vote was strongest among voters employed in the tradable sector, in high growth regions as well as among high-income earners and well educated. The No-vote was strongest among voters employed in the non-tradable sector, in particular in the public sector, and among low-income earners, the unemployed and the less educated – in short, among groups dependent on public-sector transfers to maintain their living standards in the event of adverse economic shocks. Third, political attitudes towards the European integration process heavily influenced the views of the voters towards the euro.Euro; optimum currency area; exchange rate regime; voting; referendum; Sweden

EMU and the euro - the first 10 years. Challenges to the sustainability and price stability of the euro area - what does history tell us?

EMU and the euro will face a number of challenges in the future. Two such challenges are examined here:first, the endurance prospects for the euro, and second, the inflation performance of the euro area during the coming ten years. How will it respond to them? This report provides a set of tentative answers based on the history of monetary unions and of stabilization policies. This body of evidence is exploited as the prime basis for conjectures and forecasts presented.Monetary unions, EMU, ECB, the euro, monetary and fiscal policies, Jonung

The Swedish model for resolving the banking crisis of 1991 - 93. Seven reasons why it was successful.

This study presents the main features of the Swedish approach for resolving the banking crisis of 1991-93 by condensing them into seven policy lessons. The main features of the Swedish approach to the banking crisis of 1991-93 concern political unity, a government blanket guarantee, swift policy action,an adequate legal and institutional framework, full disclosure of information, a differentiated resolution policy, and the proper design of macroeconomic policies.The Swedish model for resolving the banking crisis of 1991-93, financial crisis, bank resolution, solvency crisis, banking crisis, moral hazard, Sweden, Jonung

The euro: It can't happen, It's a bad idea, It won't last. US economists on the EMU, 1989-2002

This study of approximately 170 publications shows (a) that US academic economists concentrated on the question "Is the EMU a good or bad thing?", usually adopting the paradigm of optimum currency areas as their main analytical vehicle, (b) that they displayed considerable scepticism towards the single currency, (c) that economists within the Federal Reserve System had a less analytical and a more pragmatic approach to the single currency than US academic economists, and (e) that US economists adjusted their views and analytical approach as European monetary unification progressed. In particular, the traditional optimum currency approach was gradually put into question.The euro, optimum currency area, ECB, EMU, Federal Reserve System, monetary unification, Europe, United States, Jonung, Drea

Pioneering Price Level Targeting: The Swedish Experience 1931-1937

In September 1931, Sweden became the first country to make the stabilization of the domestic price level the official goal of its monetary policy, actually the only country that so far has adopted such an explicit price level target. Starting from the issues and concepts familiar from research and policy experience in the 1990s of inflation targeting - as contrasted to price level targeting - this paper examines the evolution of the Swedish price level targeting in the 1930s. We bring out a number of similarities and differences between price stabilization in the 1930s and in the 1990s.price level targeting;

The forecasting horizon of inflationary expectations and perceptions in the EU – Is it really 12 months?

We use survey based inflationary expectations to explore the forecasting horizons implicitly used by the respondents to questions about the expected rate of inflation during the coming 12 months. We examine the forecast errors, the mean error and the RMSEs, to study if the forecast horizon is truly 12 months as implied by the questionnaires. Our working hypothesis is that the forecast error has a U-shaped pattern, reaching its lowest value on the 12-month horizon. Our exploratory study reveals large differences across countries. For most countries, we get the expected U-shaped outcome for the forecast errors. The horizon implicitly used by respondents when answering the questions is not related to the explicit time horizon of the questionnaire. On average respondents use the same horizon when answering both questions.

The euro - what's in it for me? An economic analysis of the Swedish euro referendum of 2003

The Swedish referendum on the euro in September 2003 is an exceptional event for researchers of monetary unions and of European economic integration. Voters chose between maintaining the domestic currency, the krona, and replacing it with the euro, the single currency of the European Union. The referendum revealed significant dividing lines between Yes- and No-voters in areas such as income, education, sex, employment, geographical location and industrial structure. The aim of this study is to explain the large differences in voting behaviour. The empirical analysis of the referendum outcome is based on the traditional optimum currency area (OCA) approach, merged with an account of the distributional effects of Swedish membership of the euro area as they were perceived by the voters. The OCA approach builds upon the trade-off between reducing transaction costs by entering a monetary union, thus increasing trade and income, and obtaining macroeconomic insurance by having a domestic currency with a flexible exchange rate. This trade-off was perceived differently by voters depending on their evaluations of the costs or risks and the benefits or gains of adopting the euro versus keeping the krona, the domestic currency.Euro, krona, referendum, optimal currency theory, monetary union, Sweden, EU, Jonung, Vlachos

Is the euro advantageous? Does it foster European feelings? Europeans on the euro after five years

The introduction of the euro as a currency in physical existence in January 2002 was a major step in the European integration process. The purpose of this paper is to explore how a representative selection of 12 000 Europeans across all countries in the euro area view the effects of the euro five years after its introduction. The empirical analysis uses multinomial logistic regressions to explore the responses to two questions from the Flash Eurobarometer survey conducted in September 2006. The first question asked if the adoption of the euro was advantageous overall or not. The second one asked if using the euro had made you personally feel a little more European than before or not.Jonung, Conflitti, 978-92-79-08238-2, European integration, euro, EU, public attitudes, opinion polls, multinomial logistic regression.