There are many indications that formal methods are not used to their full potential by central banks today. In this paper we demonstrate how BVAR and DSGE models can be used to shed light on questions that policy makers deal with in practice using data from Sweden. We compare the forecast...

Monetary policy is often analysed in terms of simple rules. Such rules may be useful for many purposes, even when they do not describe the actual monetary policy strategy exactly. This paper compares monetary policy in Sweden during the inflation-targeting regime 19932002 with the policies...

In this paper we study 2-state Markov switching VAR models of monthly unemployment and inflation for three countries: Sweden, United Kingdom, and the United States. The primary purpose is to examine if periods of low inflation are associated with high or low unemployment volatility. We find that...

The use of explicit inflation targets has meant that monetary policy has become more transparent and also easier to evaluate. The analysis in this paper is based on forecasts by Sveriges Riksbank (the central bank of Sweden) on real output and inflation. Our purpose is to separate the effects on...

Applied cointegration analysis has much to gain from strong links with economic theory. For example, the current generation of equilibrium macroeconomic models have simple predi tions for cointegrating vectors. These models also suggest that important information about the economic structure can...

We test how government revenue and expenditure depend on economic activity, elections, and ideology. We show how the use of fiscal forecasts makes it possible better to understand the determinants of fiscal variables and to separate fiscal policy rules from discretionary policies. The approach...

Using an empirical New-Keynesian model with optimal discretionary monetary policy, we calibrate key parameters - the central bank's preference parameters; the degree of forward-looking behavior in the determination of inflation and output; and the variances of inflation and output shocks - to...

This book consists of three long papers, accompanied by a series of short comments (by Klaus Nesser, Erling Steigum, Danny Quah, Michael Bergman, and Seppo Honkapohja) and an introduction by the editors covering the main themes of the book. It combines a systematic empirical investigation into...

The authors test how government revenue and expenditure depend on ideology, elections, and economic activity. They show how fiscal forecasts can be used to identify the determinants of government revenue and expenditure. The approach is illustrated using a unique, unpublished Swedish data set of...

Fluctuations in prices of Swedish exports to five countries are investigated in this paper. The authors test whether there are systematic differences between prices to different markets and whether relative export prices are affected by macroeconomic conditions in destination countries. The test...