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Settlement in central bank money from a financial stability perspective
20/02/2024 -Settlement in central bank money from a financial stability perspective...
Money illusion may cause households to ignore inflation
10/04/2024 -Money illusion may cause households to ignore inflation A long-standing phenomenon in macroeconomic research is money illusion, whereby households tend to think in nominal terms and ignore the effects of inflation. One reason for such...
Monetary policy, firms’ pricing behaviour and households’ reaction to the rise in inflation
10/04/2024 -Monetary policy, firms’ pricing behaviour and households’ reaction to the rise in inflation An additional piece of the puzzle in the 2021-2022 inflation upturn was the late reaction of monetary policy-makers in many countries to indications of...
Social psychology factors in decision-making
10/04/2024 -Social psychology factors in decision-making In a famous experiment in the early 1950s, social psychologist Solomon Asch found something interesting.[19] See Asch (1951). A group of trial subjects were asked to compare two boxes: There were...
Concluding thoughts
10/04/2024 -Concluding thoughts In this Economic Commentary, we have highlighted insights from behavioural economics research that we believe can be helpful for monetary policy. We see these insights as useful complements to the existing analysis and...
Falling prices and low turnover in the housing market
10/04/2024 -Falling prices and low turnover in the housing market For a long time prior to 2021-2022, interest rates had been very low and on a declining trend. During this period, the Swedish housing market had experienced strong price increases. During...
The importance of inflation for economic decisions
10/04/2024 -The importance of inflation for economic decisions A phenomenon we described earlier is money illusion, i.e. the tendency of households and companies to ignore inflation in their economic decisions. However, it is also hypothesised that this...
Looking ahead - lasting effects of the inflation shock
10/04/2024 -Looking ahead - lasting effects of the inflation shock We previously described the literature on the importance of experience for economic agents.[48] For an overview, see Malmendier (2021). Individuals who have experienced dramatic economic...
A simple monetary policy framework
10/04/2024 -A simple monetary policy framework To describe how insights from behavioural economics could help monetary policy, we use a simple framework based both on the relationship between the interest rate, the real economy and inflation, and on the...
How life experiences influence economic decisions
10/04/2024 -How life experiences influence economic decisions In recent years, an increasing amount of research has highlighted how life experiences can influence economic decisions, especially dramatic events.[24] For an overview, see, for example,...