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- Adolfson, Malin, et al.
(författare)
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Optimal Money Policy in an Operational Medium-Sized DSGE Model
- 2011
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Ingår i: Journal of Money, Credit and Banking. - : Wiley. - 0022-2879 .- 1538-4616. ; 43, s. 1287-1331
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Tidskriftsartikel (refereegranskat)abstract
- We show how to construct optimal policy projections in Ramses, the Riksbank's open-economy medium-sized dynamic stochastic general equilibrium model for forecasting and policy analysis. Bayesian estimation of the parameters of the model indicates that they are relatively invariant to alternative policy assumptions and supports our view that the model parameters may be regarded as unaffected by the monetary policy specification. We discuss how monetary policy, and in particular the choice of output gap measure, affects the transmission of shocks. Finally, we use the model to assess the recent Great Recession in the world economy and how its impact on the economic development in Sweden depends on the conduct of monetary policy. This provides an illustration on how Rames incoporates large international spillover effects.
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- Laséen, Stefan, et al.
(författare)
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Anticipated Alternative Policy Rate Paths in Policy Simulations
- 2011
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Ingår i: The International Journal of Central Banking. - 1815-4654 .- 1815-7556. ; 7:3, s. 1-35
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Tidskriftsartikel (refereegranskat)abstract
- This paper specifies a new convenient algorithm to construct policy projections conditional on alternative anticipated policy rate paths in linearized dynamic stochastic general equilibrium (DSGE) models, such as Ramses, the Riksbank's main DSGE model. Such projections with anticipated policy rate paths correspond to situations where the central bank transparently announces that it, conditional on current information, plans to implement a particular policy rate path and where this announced plan for the policy rate is believed and then anticipated by the private sector. The main idea of the algorithm is to include among the predetermined variables (the "state" of the economy) the vector of non-zero means of future shocks to a given policy rule that is required to satisfy the given anticipated policy rate path.
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- Svensson, Lars E.O.
(författare)
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Inflation Targeting
- 2011. - Vol: 3B
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Ingår i: Handbook of Monetary Economics. - : Elsevier. ; , s. Chapter 2-
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Bokkapitel (refereegranskat)
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- Svensson, Lars E. O.
(författare)
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Practical Monetary Policy : Examples from Sweden and the United States
- 2011
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Ingår i: Brookings papers on economic activity (Print). - 0007-2303 .- 1533-4465. ; , s. 289-352
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Tidskriftsartikel (refereegranskat)abstract
- In the summer of 2010, the Federal Reserve's and the Swedish Riksbank's inflation forecasts were below the former's mandate-consistent rate and the latter's target, respectively, and their unemployment forecasts were above sustainable rates. Conditions in both countries clearly called for policy easing. The Federal Reserve maintained a minimum policy rate, soon started to communicate possible future easing, and in the fall launched QE2. In contrast, the Riksbank started a period of rapid tightening. I find the arguments against the Federal Reserve's easing and the arguments for the Riksbank's tightening unconvincing. Although the Swedish economy subsequently performed better than expected, probably an important reason was that the market implemented much easier financial conditions than were consistent with the Riksbank's policy rate path. Without the policy tightening, performance would have been even better. The U.S. economy meanwhile performed worse than expected because of factors other than monetary policy. Without the policy easing, performance would have been even worse. In short, the Riksbank did the wrong thing but was lucky, whereas the Federal Reserve did the right thing but was unlucky.
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