Sveriges Riksbank Research Articles

How the other half works: Claudia Goldin's contributions to our understanding of women's labour market outcomes

AbstractThe Royal Swedish Academy of Sciences awarded the 2023 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Claudia Goldin “for having advanced our understanding of women's labour market outcomes”. This paper surveys Goldin's contributions, analysing women's labour force participation from the late 1700s through to the present. To document women's participation in the workforce, Goldin uncovered rich data from varied sources, from government reports and city directories to health surveys and university registration cards. She combined these data with economic theory to identify the factors affecting women's employment and to explore how we might achieve gender equity today. Her work has had an immense influence on how we understand the labour market, household decision‐making, and gender inequality.

Quantitative Easing, Bond Risk Premia and the Exchange Rate in a Small Open Economy

We assess the impact of large-scale asset purchases, commonly known as quantitative easing (QE), conducted by Sveriges Riksbank and the European Central Bank (ECB) on bond risk premia in the Swedish government bond market. Using a novel arbitrage-free dynamic term structure model of nominal and real bond prices that accounts for bond-specific safety premia, we find that Sveriges Riksbank’s bond purchases raised inflation and short-rate expectations, lowered nominal and real term premia and inflation risk premia, and increased nominal bond safety premia, suggestive of signaling, portfolio rebalance, and safe asset scarcity effects. Furthermore, we document spillover effects of ECB’s QE programs on Swedish bond markets that are similar to the Swedish QE effects only after controlling for exchange rate fluctuations, highlighting the importance of exchange rate dynamics in the transmission of QE spillover effects.

Poverty Reduction and Growth Trust—2023 Borrowing Agreements with the Government of Australia, the People’s Bank of China, the Bank of Finland, the Banque De France, De Nederlandsche Bank NV, the Norwegian Ministry of Finance Representing the Kingdom of Norway, Sveriges Riksbank, and the Government of the United Kingdom

Poverty Reduction and Growth Trust—2023 Borrowing Agreements with the Government of Australia, the People’s Bank of China, the Bank of Finland, the Banque De France, De Nederlandsche Bank NV, the Norwegian Ministry of Finance Representing the Kingdom of Norway, Sveriges Riksbank, and the Government of the United Kingdom

Reflections on the 2021 Nobel Memorial Prize Awarded to David Card, Joshua Angrist, and Guido Imbens

The 2021 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to David Card “for his empirical contributions to labour economics”, and to Joshua Angrist and Guido Imbens “for their methodological contributions to the analysis of causal relationships”. Lennart B. Ackermans reflects on Card, Angrist, and Imben's work.

Banks and financial crises: contributions of Ben Bernanke, Douglas Diamond, and Philip Dybvig*

AbstractThe 2022 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Ben S. Bernanke, Douglas W. Diamond, and Philip H. Dybvig “for research on banks and financial crises”. This article surveys the contributions of the three laureates and discusses how their insights have changed the way that academics and policymakers understand banks and their roles in financial crises.

Становлення мікро- та макроекономічного аналізу фінансового посередництва Стаття друга. Макроекономічний аналіз ролі фінансових посередників у роботах Б. Бернанке та застосування теорії фінансового посередництва у боротьбі з фінансовими кризами

The second of two articles which reveal the theoretical and practical significance of the researches awarded 2022 Sveriges Riksbank Prize in Economic Sciences. The author shows the theoretical and practical influence of B. Bernanke's research on the non-monetary effects of the banking crisis on the course of the Great Depression, which marked the beginning of recognition and measurement of the macroeconomic effects of financial intermediaries as institutions performing important functions under information asymmetry. The peculiarities of the global financial crisis and the latest crisis processes in the banking sector, which are taking place in the conditions of a change in the global monetary environment, are considered in light of the laureates' works. This change – a rapid tightening of monetary policy in developed economies was a reaction not only to global price shocks associated with the full-scale Russia's invasion of Ukraine, but also to the previous delay in anti-inflationary efforts in the conditions of a combination of supply shocks with monetary demand stimulation and monetary authorities' faith in well-anchored inflationary expectations. The article considers the extent to which the crisis processes at Silicon Valley Bank, Signature Bank, First Republic Bank and Credit Suisse are described by the models developed by the 2022 Nobel laureates. Based on that analysis, the author adjusts the answer to the question about the role of banking panics in the market economy. Probable directions for reforming banking regulation in the USA are characterized. It is substantiated that the government faces a complex set of tasks: to minimize social losses from banking panics; to prevent large business losses that would have broad macroeconomic consequences; and to prevent irrational contagion with panic moods and panic as a self-fulfilling prophecy, without eliminating the very possibility of depositors fleeing from a bank with poor management. It is shown that increasing and complicating the public presence in the financial sector has an extremely powerful and difficult to assess influence on the incentives of financial intermediaries, which embody the latter’s nature as special economic entities.

Theoretical foundations of strategic motivation in the works of Nobel laureates

The purpose of the article is to expand the existing theoretical and applied understanding of strategic motivation by identifying certain aspects of this issue in the scientific works of Laureates of the Nobel Memorial Prize in Economic Sciences (officially known as The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) in the period from 2000 to 2022.The introduction discusses the differences in the understanding of the terms “strategic motivation” and “motivation” in the works of domestic and foreign scientists and practitioners, notes a long-term, future-oriented understanding of strategic motivation and its difference from the predominantly operational nature of motivation in the understanding of the classics of management science. The main part of the article sequentially analyzes the lectures and additional materials of the award committee, scientific articles, books and monographs of the laureates related to the research topics for which the award was awarded. The analysis highlights the main aspects of scientists’ research related to strategic motivation, its place and significance in the process of developing and implementing a strategy. Intermediate conclusions are made about the views and positions on the topic under consideration of each laureate, whose work was analyzed in the article. At the end of the article a general conclusion is formulated about the relevance and interdisciplinary (at the intersection of the natural sciences and liberal arts) nature of the issue of strategic motivation, emphasis is placed on the emerging trend towards considering predominantly non-material, psychological and behavioral aspects of the subject under study, the role of innovation in stimulating micro- and macro-levels. The conclusion is made about how it is possible to expand and supplement the existing understanding of strategic motivation taking into account the considered materials. It is noted that the conclusions made on the basis of the analysis can be applied in further research, as well as in practice when creating a system of strategic motivation in enterprises.The analysis is based on the theory of strategy and methodology of strategizing of the Foreign Member of the Russian Academy of Sciences (Life-time), Dr. Sc. (Econ.), Vladimir L. Kvint.

Reflections on the 2022 Nobel Memorial Prize Awarded to Ben Bernanke, Douglas Diamond, and Philip Dybvig

The 2022 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Ben Bernanke, Douglas Diamond, and Philip Dybvig “for research on banks and financial crises”. Jens van 't Klooster reflects on Bernanke, Diamond, and Dybvig's work.

Становлення мікро- та макроекономічного аналізу фінансового посередництва. Стаття перша. Теорії посередницьких функцій банків Д. Даймонда і Ф. Дибвіга та становлення мікроекономічного аналізу фінансових інституцій

The first of two articles which reveal the theoretical and practical significance of the researches awarded 2022 Sveriges Riksbank Prize in Economic Sciences. The author shows that the laureates laid the foundations of both the modern microeconomic theory of banks and financial institutions and the analysis of the role of financial intermediation in macroeconomic cycles. It is found that until the 1980s two powerful theoretical traditions dominated in the analysis of financial intermediation. The first tradition was to consider banks primarily as subjects of the money supply. It originates from the controversy between the quantitative theory of money and the real bills doctrine and culminates in the outstanding work by M. Friedman and A. Schwartz. The second tradition was a well-formalized neoclassical approach to the financial system. It was based on the efficient markets hypothesis, the Modigliani-Miller theorem, and the banking theory of E. Fama, where financial institutions are only a veil for real economic activities. It is shown that the growth of interest in the micro- and macroeconomic aspects of the financial sector activities in the late 1970s was due to the growth of its power due to the development of technologies and globalization, and due to the emergence of information economic theory which created a theoretical basis for the endogenous derivation of financial intermediaries that overcome market imperfections in ensuring the flow of funds between savers and borrowers. The article reveals the theoretical and practical importance of D. Diamond and Ph. Dybvig’s works, in which a bank endogenously arises as an optimal contract for solving important socio-economic problems of financing long-term projects with liquid deposits and of delegated monitoring of borrowers. The author emphasizes the importance of the scientists’ analysis and formalization of the incentives that determine the peculiarities of the intermediary role of banks and the nature of their services for financial regulation. It is shown that the model of delegated monitoring by D. Diamond not only demonstrates social benefits of specialization in monitoring, but also solves the problem of depositors' monitoring a bank as a monitor, revealing the incentives for the efficient implementation of borrowers monitoring by the bank: in conditions of diversification of borrowers, when their profits have an independent probability distribution, monitoring helps to avoid liquidation even in the event that part of the borrowers' projects are not successful. It is concluded that the formalization of the banks’ built-in vulnerability in the Diamond-Dybvig model, associated with their function of maturity transformation, and its overcoming by government institutional mechanisms, which, among other things, can distort the banks’ incentives, in effect substantiate the "symbiosis" of a state and banks in ensuring the latter’s stable functioning.

Market participants or the random walk – who forecasts better? Evidence from micro-level survey data

We analyse micro-level data concerning four financial variables in Sveriges Riksbank's Prospera Survey to evaluate the precision of forecasts provided by professionals active in the Swedish fixed-income market. Our results indicate that for the SEK/EUR and SEK/USD exchange rates, and the five-year government bond yield, none of the market participants that frequently participate in the survey manage to significantly outperform the random-walk forecast. For the central bank's policy rate, the market participants typically have a statistically significant higher forecast precision than the random-walk forecast at the three-month horizon; however, at the two- and five-year horizons, the random-walk forecast typically outperforms the market participants.

Forward guidance and expectation formation: A narrative approach

SummaryHow forward guidance influences expectations is not fully understood. To study this, I construct central bank data that includes forward guidance and its attributes, central bank projections, and quantitative easing, which I combine with survey data. I describe how, when, and where forward guidance has worked. I estimate that forecasters revised their interest rate forecasts in the intended direction by five basis points on average following a forward guidance change. I provide estimates for The Federal Reserve, European Central Bank, Bank of England, Bank of Canada, Reserve Bank of Australia, Reserve Bank of New Zealand, Sveriges Riksbank, and Norges Bank.

Controversies in Selecting Nobel Laureates: An Historical Commentary.

There is universal agreement that the Nobel Prizes, given to individuals who have made an extraordinarily notable contribution to humankind in the fields of chemistry, physics, physiology or medicine, literature, and peace, are the most prestigious prizes offered for human achievement. This commentary gives an overview of the basis for Alfred Nobel writing his third will that established the five prizes and includes a discussion of why those five fields were chosen. The commentary includes factors that influenced his choices and contains examples of controversial selections or omissions, especially in the earlier years. A few were errors of omission (e.g. Tolstoy, Tesla, Edison, Best, Gandhi, Franklin), some errors of commission (e.g. Fibiger, Moniz); but, given the complexity of the task, the error rate is small. In some cases, the conclusion that an error had been made is debatable. Such decisions are difficult. Arne Tiselius, a Nobel laureate in chemistry and President of the Nobel Foundation said that one cannot in practice apply the principle that the Nobel Prize should be given to the person who is best; it is impossible to define who is best. Hence, there is only one alternative: to try to find a particularly worthy candidate. This paper includes a brief review of the integration of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, established in 1968, and added to the original five Nobel Prizes; the prize was first awarded in 1969. A short discussion on the absence of a Nobel Prize in mathematics is provided. Adaptations to the development of “big” science, especially in physics, may require the Nobel Foundation to extend its limit of no more than three awardees for the prize in physics and, perhaps, other scientific disciplines.

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 2021

The Scandinavian Journal of EconomicsVolume 124, Issue 3 p. 601-602 Original Article The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 2021 First published: 23 September 2022 https://doi.org/10.1111/sjoe.12504Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat No abstract is available for this article. Volume124, Issue3July 2022Pages 601-602 RelatedInformation

Labor by design: contributions of David Card, Joshua Angrist, and Guido Imbens*

AbstractThe 2021 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to David Card “for his empirical contributions to labor economics” and to Joshua Angrist and Guido Imbens “for their methodological contributions to the analysis of causal relationships”. We survey these contributions of the three laureates, and discuss how their empirical and methodological insights transformed the modern practice of applied microeconomics. By emphasizing research design and formalizing the causal content of different econometric procedures, the laureates shed new light on key questions in labor economics and advanced a robust toolkit for empirical analyses across many fields.

Суверенная цифровая валюта – новая реальность

One of the most relevant and widely discussed trends in the financial sector is the development of a new payment technology – central bank digital currency (CBDC). CBDC is central bank-issued digital money denominated in the national unit of account, and it represents a liability of the central bank. It differs from electronic reserves (which cannot currently be accessed by individuals), physical cash, cryptocurrencies and other private digital tokens. Central banks around the world have been researching the concept and design of CBDC for several years and their work continues apace amid the COVID‑19 pandemic. This general trend encompasses large differences across jurisdictions and types of economies. Each country should make its own choice of the CBDC design, taking into account its particular circumstances. Over the last years, the share of central banks actively engaging in some form of CBDC work has increased significantly. Central banks are moving from conceptual research of CBDC to experimentation and pilot projects. CBDC projects differ starkly across countries, both in their motivations and their economic and technical design. Rising number of central banks are considering retail CBDC rather than wholesale, and “hybrid” or “intermediated” operational architectures where the CBDC is a direct claim on the central bank, but the private sector manages customer-facing activity. The paper reviews the recent advances in CBCD projects, and the experience of the countries in more advanced stages of CBCD engagement, namely the particularly advanced CBDC Chinese project of the e-yuan of the People’s Bank of China and Swedish e-krona project of Sveriges Riksbank.

A global CO2 price – Necessary and sufficient

During the last 10 years, I have spent most of my research time on the economics of climate change. Basically all of it has been done together with my colleagues Per Krusell at IIES and Conny Olovsson at Sveriges Riksbank. Being a truly cross-disciplinary field, the close interaction with many natural scientists, in particular Jonas Nycander at the department of meteorology at Stockholm University has been an absolute necessity. In this article, based on a talk at the Finnish Economic Association annual conference in February 2020, I summarize what we have learned over the years. Hopefully it can be of value to other researchers and policy makers. In any case, I am convinced that economics is key for understanding what to do about global warming. The key conclusion is that a global agreement on a (minimum) price on fossil carbon emission is necessary, sufficient and efficient solution to limiting climate change.

Integración de la Economía con la Psicología: Richard H. Thaler, Premio Nóbel de Economía 2017

Este trabajo pretende analizar las principales contribuciones de Richard H. Thaler a la ciencia de la economía del comportamiento, las cuales han sido consideradas para otorgarle el Premio Nobel Sveriges Riksbank de Economía en 2017. Sus aportaciones incorporan la psicología en los procesos de tomas de decisiones económicas apartándose de la racionalidad instrumental y la teoría de la elección racional para contribuir a la generación de una nueva perspectiva en la teoría económica y en la política económica. El método empleado es fundamentalmente el analítico-descriptivo basado en una revisión de sus principales publicaciones realizadas. Finalmente se concluye que Thaler y sus colaboradores ejercen una infl uencia relevante al generar un nuevo marco de referencia para explicar y predecir resultados económicos desde un acercamiento del comportamiento racional limitado, la teoría de contabilidad limitada y el modelo de planeador-hacedor bajo el concepto de empujón o nudge, el cual tiene un impacto en el diseño e implementación de las políticas públicas.

Matthew effects in science and the serial diffusion of ideas: Testing old ideas with new methods

AbstractThe Matthew effect has become a standard concept in science studies and beyond to describe processes of cumulative advantage. Despite its wide success, a rigorous quantitative analysis for Merton’s original case for Matthew effects—the Nobel Prize—is still missing. This paper aims to fill this gap by exploring the causal effect of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (hereafter the Nobel Prize in Economics). Furthermore, we test another of Merton’s ideas: successful papers can draw attention to cited references, leading to a serial diffusion of ideas. Based on the complete Web of Science 1900–2011, we estimate the causal effects of Nobel Prizes compared to a synthetic control group which we constructed by combining different matching techniques. We find clear evidence for a Matthew effect upon citation impacts, especially for papers published within 5 years before the award. Further, scholars from the focal field of the award are particularly receptive to the award signal. In contrast to that, we find no evidence that the Nobel Prize causes a serial diffusion of ideas. Papers cited by future Nobel laureates do not gain in citation impact after the award.

Discovering Auctions: Contributions of Paul Milgrom and Robert Wilson*

AbstractThe 2020 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Paul R. Milgrom and Robert B. Wilson for “improvements to auction theory and inventions of new auction formats”. In this survey article, we review the contributions of the laureates, emphasizing the subtle interplay between deep theoretical questions and practical design challenges that resulted in one of the most successful fields of economics.

DICE and the Carbon Budget for Ambitious Climate Targets

AbstractThe Dynamic Integrated Climate‐Economy (DICE) model is one of the most influential Integrated Assessment Models available. Its founder Professor William Nordhaus was recently awarded Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel due to his pioneering work on the economics of climate change. In a recent paper in American Economic Journal: Economic Policy, Nordhaus uses the model to conclude that a 2.5°C target is almost out of reach. In this paper, we update DICE 2016 R2 with state‐of‐the‐art models of the carbon cycle, heat uptake into the oceans, and the role of non‐CO2 forcers. We find that the allowable remaining carbon budget (over the period 2015–2100) to meet a 2.5°C target to be 2,360 GtCO2 whereas the estimate obtained using DICE 2016 R2 is about 460 GtCO2. Nordhaus's estimate of the remaining carbon budget for this target is hence five times lower than estimates made by our updated DICE. We also compare our results with estimates by the Intergovernmental Panel on Climate Change (IPCC), and find our results to be in line with the carbon budgets presented in IPCC SR 1.5. We explain the reasons behind the difference between our result and that of Nordhaus and propose that an updated climate module in DICE is warranted.