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Tag Archives: sweden

Lockdowns are partly endogenous

In monetary policy, a common mistake is to assume that low interest rates and/or QE are indications of an easy money policy. They might be, but more often they are the effect of a tight money policy that drove interest rates to zero or below, and dramatically increased the demand for liquidity (i.e. base money.) I wonder if something similar is true of lockdowns during the Covid-19 pandemic. Certainly there are occasions when lockdowns are reflective of an aggressive...

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Sweden’s Keyhole Solution

As I explain in Open Borders, a responsible advocate of government intervention always asks, “Is there any cheaper and more humane approach?”  “Government should do something” is perfectly consistent with “Scrupulously avoid collateral damage.”  Following Tim Harford, I call such responsible approaches “keyhole solutions.”  This recent AIER piece from James Cooper (via Dan Klein) provides a fine example: I am an American living in Stockholm. I have been living here...

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Sweden’s Economy: Predicting is Not Showing

Sweden has attracted global attention for not imposing a full lockdown, as seen in most of Europe, to contain the coronavirus pandemic. Nonetheless, data released from the country’s central bank and a leading Swedish think tank show that the economy will be just as badly hit as its European neighbors, if not worse. This is from Holly Ellyatt, “Sweden had no lockdown but its economy is expected to suffer just as badly as its European neighbors,” CNBC.com, April 30....

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The main (economic) problem is social distancing, not lockdowns

I’m not a fan of mandatory lockdowns. At the same time, I have argued that the crash in the global economy is mostly caused by voluntary social distancing, not mandatory lockdowns. It seems like the Swedish Riksbank agrees: Data released from the country’s central bank and a leading Swedish think tank show that the economy will be just as badly hit as its European neighbors. That’s what I expected from the very beginning, although I would have much preferred to be...

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Dan Klein on Sweden

Dan Klein has an interview on Sweden, a country he knows well. It will read counterintuitive to many. In short, Dan argues that Swedish civic virtue precedes the welfare state and does not depend on it. Thinking otherwise implies not understanding “why the Swedish bumblebee flies as well as it does a strong and liberal national identity, free markets, civic virtue”. A couple of highlights. Dan emphasizes the importance of an entrepreneurial class that is relatively...

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Easy credit and tight money

The title of this post is the shortest description I could come up with for the global economy circa 2019. Because these two concepts get confused, a short explanation is in order. The best way to judge the stance of monetary policy is by looking at the growth rate in “M*V” aka nominal GDP. By that criterion, money has been tighter than average in America, and even more so in Europe and Japan. That helps to explain low nominal interest rates, but it’s not the whole...

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Socialism Does Indeed Suck

Two free-market economists, Robert Lawson of Southern Methodist University and Benjamin Powell of Texas Tech University, have pulled off a marvelous stunt. Their just-published book, Socialism Sucks, is a humorous travelogue about their experiences in various socialist and allegedly socialist countries in the last few years. The book, subtitled “Two Economists Drink Their Way Through the Unfree World,” is the best in this genre since fellow drinker P.J. O’Rourke’s...

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Inflation is about monetary policy

I continue to see all sorts of non-monetary theories of inflation. For instance, “demographics” is often cited for the low inflation rate in Japan. There’s a much simpler explanation for inflation—monetary policy. The following graph shows the exchange rate for three European countries, Denmark, Switzerland and Sweden: During this period, the Danish krone (red line) was pegged to the euro.  This meant that the Danish central bank was not able to adopt an independent...

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Tuesday afternoon links – Publications – AEI

AEI Tuesday afternoon links 1. Cartoon of the Day (above). As Steve Horwitz suggested recently instead of “trade wars” we should call them what they really are: “Economic Suicide Bombings.” 2. Backfire Economics. Caterpillar drops the most since 2015 after industrial giant says costs are rising from tariffs. “Manufacturing costs were higher due to increased material and freight costs. Material costs were higher primarily due to increases in steel prices and...

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Sweden: More Signs The World’s Biggest Housing Bubble Is Cracking

We like to highlight that although Sweden’s property bubble is not the longest running (that accolade goes to Australia at 55 years), it is probably the world’s biggest, even though it gets relatively little coverage in the mainstream financial media. A month ago, we noted that SEB’s housing price indicator suffered its second biggest ever drop, falling by 39 points, only lagging a steeper fall from ten years earlier. This month the indicator, which shows the balance between households...

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