EFFECTIVENESS OF MONETARY POLICY IN SWEDEN |
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| Authors: | Richhild Moessner Jakob de Haan David‐Jan Jansen |
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| Institution: | 1. 41763508406+31 20 5242500;2. Economic Policy and Research, De Nederlandsche Bank, Amsterdam, PO BOX 98, The Netherlands;3. Cass Business School, London, UK;4. +31 20 5245756+31 20 5242500;5. University of Groningen, Groningen, The Netherlands;6. CESifo, Munich, Germany |
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| Abstract: | We study whether the sensitivity of Swedish interest rates to domestic economic news was affected by the zero lower bound (ZLB) and forward guidance. We find that the sensitivity was reduced at the ZLB at short but not at longer maturities, suggesting that monetary policy remained effective at longer horizons. Moreover, it was unaffected during a later period of the ZLB/negative policy rates, suggesting that monetary policy remained effective at all horizons then. We also find that the sensitivity of interest rates to domestic news was unaffected by forward guidance, suggesting that market participants understood the conditionality of the forward guidance. (JEL E52, E58) |
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