The Riksbank is wrong about the debt: Higher policy rates increase rather than decrease the household-debt ratio

Lars E.O. Svensson 04 September 2013

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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 has more recently justified this policy by maintaining that a lower policy rate would increase the household-debt ratio (the ratio of debt to disposable income) and thereby any risks associated with the debt.

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Topics:  Monetary policy

Tags:  Sweden, Riksbank, household debt

The audit society and its enemies

Niklas Bengtsson, Per Engström 28 October 2014

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In the second season of The Wire, thirteen dead women are discovered in a cargo container in Baltimore. Being a case with a low probability of being solved, the different managers of the police force immediately start arguing over which department is responsible for investigating the issue. The incentives are clear – whoever gets the case will have poor statistics to show when the management of the department is audited at the end of the year. The consequence is bribes, corruption, and a dysfunctional police force.

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Topics:  Frontiers of economic research

Tags:  agency, motivation, motivation crowding-out, intrinsic motivation, incentives, performance-related pay, trust, audits, Sweden, non-profits, charity

Quantifying the macroeconomic effects of large-scale asset purchases

Karl Walentin 11 September 2014

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Central banks have used various unconventional monetary policy tools since the onset of the financial crisis yet the debate continues regarding their efficiency. This column attempts to shed light on the ‘bang for the buck’, or the macroeconomic effects, of one such unconventional monetary policy – the Federal Reserve’s large-scale asset purchases of mortgage-backed securities employed during the Fed’s QE1 and QE3 programs.

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Topics:  Global crisis Monetary policy

Tags:  monetary policy, unconventional monetary policy, large-scale asset purchases, central banking, financial crisis, Federal Reserve, quantitative easing, mortgage-backed securities, term premia, zero lower bound, interest rates, US, UK, Sweden, mortgages, global crisis

Inheritance flows in Sweden, 1810–2010

Jesper Roine, Henry Ohlsson, Daniel Waldenström 08 August 2014

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Thomas Piketty’s book Capital in the Twenty-First Century (Piketty 2014) has received enormous attention since its publication. A fundamental question raised is whether a person’s lifetime income is the result of his or her own efforts or, alternatively, founded on inheritance. Even for those who believe that inequality does not matter as long as it is based on one’s own effort, the potential of a return to high levels of inequality based on inheritance is a totally different matter. To many people, such a development would be much less acceptable than increased inequality per se.

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Topics:  Economic history Europe's nations and regions Poverty and income inequality

Tags:  Sweden, Inequality, inheritance, wealth, capital, capital accumulation

Winners of a European banking union

Dirk Schoenmaker, Arjen Siegmann 27 February 2013

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The aim of the prospective banking union is to foster financial stability in Europe. The euro sovereign debt crisis has shown that financial stability cannot be managed effectively at the national level, because of the diabolic loop between national governments and banks (Alter and Schüler 2012). A truly integrated European-level banking system can do much to stabilise the Eurozone by breaking this diabolic loop.

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Topics:  EU institutions EU policies Europe's nations and regions

Tags:  Sweden, Spain, UK, Netherlands, Bailouts, Eurozone crisis, banking union

Fiscal consolidation in Sweden: A role model?

Martin Flodén 25 September 2012

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Twenty years ago, in September 1992, the Swedish central bank raised its policy rate to 500% in an attempt to defend the fixed exchange rate during the European currency crisis. The Swedish economy was then already in the midst of a severe economic crisis.

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Topics:  Europe's nations and regions Global crisis International finance

Tags:  Sweden, financial crises, Eurozone crisis

The curse of advanced economies in resolving banking crises

Luc Laeven, Fabian Valencia 09 July 2012

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Countries typically resort to a mix of policies to contain and resolve banking crises, ranging from macroeconomic stabilisation to financial sector restructuring policies and institutional reforms. However, despite many commonalities in the origins of crises (Reinhart and Rogoff 2009), existing crisis management strategies have been met with mixed success.

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Topics:  Global crisis Macroeconomic policy

Tags:  Sweden, Japan, financial crises, banking crises, global crisis, Eurozone crisis

What can Europe learn from Sweden? Four lessons for fiscal discipline

Lars Calmfors 12 March 2012

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Several Eurozone countries are currently struggling with acute fiscal crises (eg Corsetti and Müller 2012). At the same time, the new fiscal compact is an attempt to beef up fiscal frameworks for the future. In order to judge both the fiscal consolidation efforts and the reforms, comparisons with economies that have in the past carried through such processes successfully are helpful.

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Topics:  Macroeconomic policy

Tags:  Sweden, fiscal policy, fiscal crises

Can education policy be used to fight crime?

Randi Hjalmarsson, Helena Holmlund, Matthew Lindquist 29 November 2011

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How should society fight crime? Should we adopt tough-on-crime policies that increase monitoring and lengthen prison sentences? Or should we adopt a softer strategy aimed at alleviating poverty and combating discrimination?

In the past decade, economists have entered this ongoing debate in earnest. An excellent example of this new engagement is Cook and Ludwig (2011), which proposes three concrete policies for fighting crime:

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Topics:  Education

Tags:  Sweden, crime

The importance of exports and services trade re-evaluated

Henrik Isakson 25 June 2011

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It took some time before the concept of vertical specialisation, coined by Hummels, Ishii, and Yi in 2001, reached a broader non-academic audience. Estimating the import content of exports was not something that bothered policymakers. Today however, this formerly academic exercise is at the core of the debate in the trade policy community. New trade statistics are being calculated and estimated.

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Topics:  International trade

Tags:  Sweden, exports, supply chains, Services trade

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