In the last few years, the Riksbank has conducted a monetary policy that has led to substantially lower inflation than the inflation target and unnecessarily high unemployment.
The Riksbank is wrong about the debt: Higher policy rates increase rather than decrease the household-debt ratio
Lars E.O. Svensson, 4 September 2013
Has US household deleveraging ended? A model-based estimate of equilibrium debt
Bruno Albuquerque, Ursel Baumann, Georgi Krustev, 18 April 2014
The balance sheet adjustment in the household sector has been a prominent feature of the last US recession and subsequent recovery. The beginning of the economic downturn in late 2007 broadly coincided with a sustained reduction in household liabilities relative to income – that is, household deleveraging – which contrasted with the strong build-up of debt before the crisis.
How did household balance sheets affect consumption during the Great Recession?
Scott Ross Baker, 19 January 2014
The presence of substantial amounts of household debt in 2007 has prompted many economists and policymakers to link debt to the depth of the recession in the following years. The possibility that higher levels of household debt induce deeper or longer recessions has important implications for both financial regulation and the size of the social safety net.
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