Karl Walentin

Karl Walentin


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

Telefon + 46 8 787 04 91
E-post [email protected]

Macroeconomics, macro-labor, financial frictions

Short bio

Karl's main research area is macroeconomics with a focus on business cycles. Karl has done research on 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. As part of that project he also quantified the macroeconomic effects of mortgage-related large scale asset purchases by the Federal Reserve. Karl has also built and estimated DSGE models of various kinds, both for research and policy purposes. His most recent work concerns issues within macro-labor. Together with Andreas Westermark he is quantifying how volatility of unemployment 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. Both of these projects utilize a solution algorithm developed by Walentin and Westermark that can handle on-the-job search for jobs with different productivities in a setting with aggregate uncertainty and positive bargaining power of workers.


Karl Walentin's CV


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


"Financial Frictions, Investment and Tobin's q", 2018, Journal of Monetary Economics, forthcoming (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

“Learning on the Job and the Cost of Business Cycles”, (with Andreas Westermark). Sveriges Rikbank Working Paper Series No. 353. March 2018.

"Manufacturing Decline and House Price Volatility" (with Isaiah Hull, Conny Olovsson and Andreas Westermark). Sveriges Riksbank Working Paper Series No. 349. December 2017 (updated September 2018).

"Involuntary Unemployment and the Business Cycle", (with Lawrence Christiano and Mathias Trabandt). Sveriges Riksbank Working Paper Series No. 238. Revise and Resubmit at Review of Economic Dynamics.
Technical appendix  July 2018.

Work in progress

"The monetary transmission mechanism in a low real rate environment'' (with Jack Chen, Daria Finocchario and Jesper Lindé)

"Skill loss, job mismatch and the slow recovery from the Great Recession" (with 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.