New issue of the Riksbank’s journal Economic Review

News The year’s second edition of the Economic Review contains four articles spanning a broad field of central-bank-related areas. The first article is about the Riksbank’s balance sheet and the link to financial independence. The second article contains a review of a new and rapidly growing area – online lending platforms. The final two articles concern wage formation in Sweden.

The articles in the second issue of the Riksbank’s journal Economic Review for 2019:

The Riksbank’s balance sheet and financial independence

David Kjellberg and David Vestin go through how the Riksbank’s balance sheet is structured, how it has changed over time and how earnings capacity has developed over time. They point to a combination of decreasing banknote volumes and low interest rates having contributed to a declining earnings capacity. If this trend continues, it means that the Riksbank will eventually need more equity to ensure its financial independence.

FinTech credit: online lending platforms in Sweden and beyond

Christoph Bertsch and Carl-Johan Rosenvinge describe and analyse online lending platforms. These are new players in the financial sector that enable households or companies to borrow directly from investors online, without going via traditional banks. In the article, they describe developments internationally, and are also first to analyse the development of the Swedish FinTech credit sector.

How can various structural changes in the economy affect wages and inflation?

Andreas Westermark provides a review of the research literature on different structural changes that may have affected wage formation and price-setting in Sweden over the last 25 years, in light of the large-scale changes that have taken place in Sweden and abroad during this period. In the article, he discusses the effects that domestic reforms, increasing foreign trade, technical development that favours highly educated people, and sharply rising migration have had. Somewhat surprisingly, he finds in the research literature that the rise in migration and labour market integration within the EU in recent decades have had limited effects on wages in general. However, this does not rule out the possibility that the effects may have been greater for certain sectors, such as construction.

Wage formation in Sweden: With Germany as a compass?

In this article, Andreas Westermark studies how wage formation in Sweden has worked since the Industrial Agreement was reached at the end of the 1990s. Estimated wage-setting equations confirm that the Industrial Agreement has so far worked as a benchmark for other sectors, and that industrial wages provide a significant and strong explanatory value for wages in both the construction and the service sector. Industrial wages, in turn, shall guarantee the industrial sector’s long-term competitiveness and be in line with the Riksbank’s inflation target in the long run. The findings in the article show that wage-setting in Swedish industry is affected by wages in Germany – and to an even greater extent by wages in the euro area – over and above what fundamental factors in a standard competitive price-setting model indicate.

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Updated 10/10/2019