Karl Walentin

Karl Walentin


Avdelningen för penningpolitik
Sveriges Riksbank
SE-103 37 Stockholm, Sweden

Telefon + 46 8 787 04 91
E-post karl.walentin@riksbank.se

Macroeconomics, macro-labor, financial frictions

Short bio

Karl Walentin obtained his PhD in economics from New York University in 2005. He has worked at the Research Division of Sveriges Riksbank since, currently as an Advisor. Karl coordinates the macroeconomic policy work of the Research Division since 2018. For shorter periods (“mini sabbaticals”) he has visited the Board of Governors, the Federal Reserve Bank of San Francisco and the Swedish Ministry of Finance.

Karl’s main research area is macroeconomics with a focus on business cycles. One strand of this research concerns the importance of financial factors for the business cycle. For example, he has documented the importance of residential mortgage spreads for cyclical variation in macroeconomic variables. In a more recent project, Karl documents the factors driving the increase in household debt since the 1990’s and analyze which macroprudential policy tool is least contractive/costly in a setting where policy interest rates are at the lower bound. His most recent work concerns issues within macro-labor. Together with Andreas Westermark he quantified how unemployment volatility contributes to the cost of business cycles by reducing the level of GDP. An important amplifying mechanism in this context is learning on-the-job/skill loss when unemployed. In related work Walentin and Westermark explore the hysteresis effects of human capital and how this helps our understanding of the slow recovery from the Great Recession. This project also has implications for the speed of recovery for the economy from the Covid-19 crisis. Finally, using rich microdata to calibrate a general equilibrium model, Karl is quantifying how immigration is affecting the macroeconomy.


Karl Walentin's CV


Ph.D., Economics, New York University, 2005.
M.Sc., Economics, Stockholm School of Economics, 1999


"Involuntary Unemployment and the Business Cycle", 2020, Review of Economic Dynamics, forthcoming (with Lawrence Christiano and Mathias Trabandt). Technical appendix

"Financial Frictions, Investment and Tobin's q", 2019, Journal of Monetary Economics, Volume 103, pp. 105-122 (with Dan Cao and Guido Lorenzoni).

"Is a bubble forming in Swedish housing prices?" (with Emilio Dermani and Jesper Lindé), Sveriges Riksbank Economic Review, 2016:2, Sveriges Riksbank.

"Refining Stylized Facts from Factor Models of Inflation", Journal of Applied Econometrics, 2015, Vol 30, pp 1192-1209 (with Ferre de Graeve). Appendix

"Business Cycle Implications of Mortgage Spreads", Journal of Monetary Economics, 2014, Vol. 67, pp 62-77. Appendix

"Expectation Driven Business Cycles with Limited Enforcement", Economics Letters, 2014, Vol. 124, pp 300-303.

"Housing Collateral and the Monetary Transmission Mechanism", Scandinavian Journal of Economics 2014, Vol. 116(3), pp. 635-668.

"Discussion of 'Capital Injection, Monetary Policy, and Financial Accelerators" by Hirakata, Sudo and Ueda, 2013, International Journal of Central Banking, Vol. 9(2), pp. 147-154.".

"Introducing Financial Frictions and Unemployment into a Small Open Economy Model", Journal of Economic Dynamics and Control, Vol. 35(12), pp. 1999-2041, 2011 (with Lawrence Christiano and Mathias Trabandt). Also available as Sveriges Riksbank Working Paper No. 214
Appendix, Computational appendix , Code for running model

"DSGE Models for Monetary Policy Analysis", Handbook of Monetary Economics, Vol 3A, 2010, edited by B. M. Friedman and M. Woodford. (with Lawrence Christiano and Mathias Trabandt).

"Earnings Inequality and the Equity Premium" The B.E. Journal of Macroeconomics: Vol. 10 : Iss. 1 (Contributions), Article 36, 2010.

"Block Kalman filtering for large-scale DSGE models", Computational Economics, Vol. 33(3), pp. 277-304, 2009 (with Ingvar Strid). Working paper version.

Working Papers

"The costs of macroprudential deleveraging in a liquidity trap’’ (with Jack Chen, Daria Finocchiaro and Jesper Lindé). CEPR Discussion paper No. 14564 April 2020.

“Learning on the Job and the Cost of Business Cycles”, (with Andreas Westermark). Sveriges Rikbank Working Paper Series No. 353. April 2020 (updated June 2020). Resubmitted to AEJ – Macroeconomics

"Manufacturing Decline and House Price Volatility" (with Isaiah Hull, Conny Olovsson and Andreas Westermark). Sveriges Riksbank Working Paper Series No. 349. December 2017 (updated July 2019). Revise and resubmit at Review of Economic Dynamics.

Work in progress

"Skill loss, job mismatch and the slow recovery from the Great Recession" (with Andreas Westermark)

“Dynamic macroeconomic implications of migration” (with Conny Olovsson and Andreas Westermark)

Earlier papers

"Asset pricing implications of two financial accelerator models"


American Economic Review, Quarterly Journal of Economics, Review of Economics and Statistics, Journal of the European Economic Association, Journal of Monetary Economics, Journal of Economic Theory, AEJ Macroeconomics, Journal of Economic Dynamics and Control, Journal of Financial Stability, Review of Economic Dynamics, Journal of Money, Credit, and Banking, Macroeconomic Dynamics, Journal of Macroeconomics, Economic Inquiry, Scandinavian Journal of Economics, Computational Economics, B.E. Journal of Macroeconomics, Economics Letters, Applied Economics Quarterly, Manchester School.