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We point out that official forecasts of output dynamics are crucial to the assessment of cyclically adjusted budget balances, and provide evidence that in some euro-area countries biased forecasts have played a thus far neglected role in generating excessive deficits. We suggest that the forecast bias may be politically motivated, and that forecasts produced by an independent authority would be be
Inflation targeting is the monetary strategy of all EU member states; whether in the euro area, the two euro-outs, Sweden and the United Kingdom. The latter are now faced with two alternatives to achieve price stability: either remain outside the euro area or join it as full-fledged members. This paper examines this policy choice starting from the views of Knut Wicksell, who considered it in his 1
Aims to shed light on the choice of exchange rate system facing Finland and Sweden by using theories of optimum currency areas as framework. Review of theories dealing with optimum currency areas; Relationship of Finland and Sweden and between these two countries and other industrial countries; Advantages of a Finnish-Swedish monetary union over membership within the European Monetary Union.
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 of inflation targeting - as contrasted to price level targeting - this paper examin
We study common features in the income velocity of money, income, and interest rates for Canada, the U.S., the U.K., Sweden and Norway using annual data from 1870. The recently developed and refined techniques of testing for cointegration are employed.The evidence suggests there is a unique long-run relationship in velocity but not in income and interest rates. Moreover, we find that only a model
In this study, the recent literature on the integration of fiscal and monetary policy is used to examine the suspensions and resumptions of currency convertibility in Sweden during the period 1668-1931. We demonstrate that urgent demands for financing of war expenditures forced the Swedish Riksbank to abandon convertibility of its notes in all cases of suspensions prior to 1914. We argue that the
This article reports the result of a survey designed to investigate the degree of uncertainty by which a representative sample of Swedish households hold their perceptions and expectations of inflation. The public displays hardly any uncertainty concerning the direction of change of the price level as measured by the ratio of ‘don’t know’ answers. However, when asked for numerical estimates of theThis article reports the result of a survey designed to investigate the degree of uncertainty by which a representative sample of Swedish households hold their perceptions and expectations of inflation. The public displays hardly any uncertainty concerning the direction of change of the price level as measured by the ratio of ‘don’t know’ answers. However, when asked for numerical estimates of the
Data Release 5 (DR5) of the Radial Velocity Experiment (RAVE) is the fifth data release from a magnitude-limited (9 < I < 12) survey of stars randomly selected in the Southern Hemisphere. The RAVE medium-resolution spectra (R ∼ 7500) covering the Ca-triplet region (8410-8795 A) span the complete time frame from the start of RAVE observations in 2003 to their completion in 2013. Radial velocities f
The income velocity of money declined sharply in Sweden between the 1870's and the outbreak of World War I. This decline is explained by a monetization process. An account of this process is given focusing on (a) the growth of commercial banking, (b) changes in wage contracts and in labor markets, and (c) changes in exchange arrangements in the markets for goods. A number of proxy measures of the
The income velocity of money in Canada, the United States, Great Britain, Norway and Sweden displays a U-shaped pattern over the last one hundred years. This paper presents and tests empirically an explanation for this secular pattern emphasizing the influence on velocity of institutional changes. The inclusion into a simple velocity function of institutional developments such as the process of mo
When Sweden was forced to leave the gold standard in September 1931—one week after the Bank of England had taken the same step—the Swedish authorities declared that the aim of Swedish monetary policy should be to stabilize the internal purchasing power of the krona. that is, a price stabilization norm was adopted by the Government as the guide for the Riksbank. The Riksbank, left with the task of
This paper examines the conduct and the effects of Swedish monetary policy in the 1930's. Three major conclusions emerge from the study: (1) The conduct of monetary policy specifically the devaluation of the Swedish currency in 1931 and the subsequent program of price stabilization, had a major effect on the aggregative behavior of the Swedish economy in the 1930's. (2) The impact of the new fisca
The purpose of this paper is to study the determination of annual changes in the money wage rate and in the price level in Sweden during the period 1922–1971. We have chosen to examine such a long span of years in order to make comparisons between various time periods and to investigate to what extent a given set of explanatory variables can account for the movements in wages and prices during the
