World Premiere of the musical Wealth of Nations

January 27, 2026

A musical is planned to commemorate  250 years of Wealth of Nations:

Gustavo Dudamel — the Oscar L. Tang & H.M. Agnes Hsu-Tang Music & Artistic Director Designate — conducts the World Premiere of the wealth of nations, a highly anticipated commission from the Pulitzer Prize–winning composer David Lang. Inspired by economist Adam Smith’s 1776 magnum opus, Lang dramatizes this foundational work about economics as inspired by Handel’s treatment of Biblical texts in Messiah. “I want this work to be enjoyable and thought-provoking,” says Lang, “encouraging audiences to consider what we truly value.”

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Demographic Transition in India – Implications for State Finances

January 27, 2026

RBI released its Annual publication: Study of State Finances for 2025-26.

The report has a chapter on ongoing demographic transition in India’s States (read ageing) and the impact it will have on their finances:

India’s demographic transition is increasingly influencing the State government finances. While a favourable age profile supports demographic dividend at the national level, the interstate difference in age structure has altered the window of opportunity for the States. The youthful States have a wider window of opportunity benefiting from expanding working age population and stronger revenue mobilisation.

In contrast, the window is getting narrower for the ageing States facing fiscal pressure arising out of shrinking tax bases and rising obligations from committed expenditure. The differential fiscal pressure arising out of divergent age structure of States calls for forward-looking policies incorporating population dynamics and the related fiscal challenges.

Going forward, youthful States may harness their demographic dividend by strengthening human capital investments, intermediate States may balance growth priorities with early preparation for ageing, and ageing States may enhance revenue capacity alongside healthcare, pension and workforce policy reforms.

 

Posted in Academic research & research papers, Central Banks / Monetary Policy, Demographics/Pension, Economics - macro, micro etc, Financial Markets/ Finance, Indian Economy/Financial Markets | Leave a Comment »

Book review: Keynes Hayek, the Clash that Defined Modern economics

January 27, 2026

Book review: Keynes Hayek, the Clash that Defined Modern economics
Author: Nicholas Wapshott,
Year: 2011
Publsiher WW Norton Company, NY

I just finished this book on the Keynes and Hayek rivalry and how it shaped the modern economic thinking. The book is written by the British journalist Nicholas Wapshott who has followed it up with another rivalry book featuring Samuelson and Freidman. Earlier he has written books on Thatcher, Reagan, Roosevelt, and so on.

Wapshott writes on the Keynes-Hayek rivalry like a thriller with the reader turning page in excitement and anticipation (only students of economics can understand this!). He starts with explaining the early lives of Keynes and Hayek and then beautifully stitches how the rivalry starts to take shape. Hayek sees the horrors of hyperinflation and follies of government policy in Austria. Keynes is part of key moments in world politics and economics and sees the complete breakdown of world order. How the two perceive the world and have near opposite suggestions forms the crux of the famed rivalry. Hayek prescribes that the role of government should be minimal and role of private sector should be larger. Keynes on the other hand prescribes that the government should play a major role in shaping the economy.

After setting the grounds for rivalry, the book divides itself into phases. Even though Keynes dies prematurely just after the World War –II (Hayek lives till 92), Keynesian ideas spread around the world. From WW-II to the 1970s, it is age of Keynes. Post rise of inflation in 1970s, Hayekian and Friedman’s monetarism takes over. The 2008 crisis brings Keynes back from the dead. All these phases are explained with how the politics of that time reacts and takes these two key ideas forward. Reagan and particularly Thacther were deep admirers of Hayek and tried to implement his ideas as policies but met with little success. Likewise, the leaders adopted Keynesianism post 2008 crisis but also met little success.

Even with fierce rivalry of ideas there was mutual respect and admiration. When London School of Economics was evacuated during Second World War, Keynes offered Hayek to live in Kings’ College Cambridge. It is such a poignant tale. And then both Keynes and Hayek hoped their book are reviewed and critiqued by their rival for publicity. Those days were different.

Overall a much valued book. Givesn you great insights on how ideas, institutions and individuals shape our world.

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A Teacher Writes to Students Series (61): Multicultural Bonhomie

January 23, 2026

A Teacher Writes to Students Series (61):  Multicultural Bonhomie
By Annavajhula J C Bose, PhD
Former Professor, Department of Economics, SRCC, DU

Read the rest of this entry »

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Can the Federal Reserve be split in two?

January 23, 2026

Daniel Tarullo, Fed Governor from 2009-17 in this interesting paper asks the question whether Federal Reserve can be split in two:

The Supreme Court has moved toward invalidating statutory for cause removal protections for independent agency leaders under its expanding unitary executive doctrine. It has hinted that the Federal Reserve may be exempt because of its unique historical pedigree. At the same time, in an order grounded in the court’s expansive notion of the President’s Article II executive power, the Trump administration’s Executive Order 14215 seeks to subject the Fed’s regulatory functions—but not its monetary policy—to presidential oversight.

The threat or fact of removal, the usual means by which a President can enforce Executive Orders, could only be exercised for regulatory reasons. This bifurcation is unworkable: Enforcing presidential control over regulation inevitably threatens monetary policy independence. The only durable solution is to respect the Federal Reserve Act’s for cause protection for Fed governors across all the board’s functions.

All eyes and attacks on Federal Reserve and Jerome Powell.

 

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When broadband comes to banks: Credit supply, market structure, and information acquisition

January 22, 2026

Angelo D’Andrea, Marco Pelosi and Enrico Sette in this voxeu post discuss what happens when banks get access to broadband:

Banks have long relied upon cutting-edge technologies to deliver products and improve efficiency, but there is limited evidence on the impact of fast internet on banking activities, particularly in lending. This column examines the effect of broadband adoption on lending in Italy from 1998 to 2008. Broadband boosts credit supply and branch efficiency by improving the efficiency with which banks collect, process, and transmit borrower information. Banks can more tightly monitor borrowers and therefore lend more readily to firms without credit scores or prior credit history, which primarily benefits small and medium-sized firms.

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Bank of Korea Rejects M2 Growth as Cause for High Exchange Rate

January 22, 2026

Interesting news about monetary economics from South Korea:

“What I find most heartbreaking and strange lately is the story about the M2 growth rate,” said Bank of Korea Governor Rhee Chang-yong during a press briefing immediately after the first Bank of Korea Monetary Policy Committee meeting of this year on the 15th, in response to the question: “There are criticisms that the government and the central bank have recently injected a lot of liquidity into the market, driving up exchange rates and real estate prices. What are your thoughts?”

The committee decided to keep the base interest rate unchanged for the fifth consecutive time that day, and Governor Rhee stated, “It is certain that high exchange rates were a key factor.” However, he firmly denied claims that “the central bank’s excessive liquidity injection was to blame,” calling them “not factual.” Unusually, Deputy Governor Park Jong-woo held a separate briefing after the governor’s press conference to refute these arguments. Why has M2, a concept unfamiliar to the general public, become a central point of debate in the recent high exchange rate issue? What is the actual level of M2 in South Korea, and are there other variables to consider? This article answers questions surrounding the recent “M2 controversy.”

Apparently increase in M2 and depreciation of Won happened at the same time leading to controversy. The article goes on to explain that it is not so straight forward to link M2 to currency.

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Nuclear Operations with a High Penetration of Renewables: The Case of France

January 21, 2026
Nicolas Astier & Frank A. Wolak in this NBER paper review France generating electricity via nucelar technology: 

Nuclear and intermittent renewables (wind and solar) are generally regarded as the only scalable technologies producing low-carbon electricity. However, the extent to which these technologies can co-exist in a reliable power system depends on whether nuclear units can adjust their operations to renewable output fluctuations. Using hourly data from the French power system, we find that nuclear units are operated quite flexibly, and that the foregone energy production due to “load following” actions (relative to the counterfactual of operating at full capacity during load following events) is currently limited. However, we find that an additional load following event is associated with a slightly higher likelihood of a unit failure. We also find that unit-level minimum output constraints are binding more frequently as system-wide renewable generation increases, especially so for units most exposed to solar generation. In 2024, hours during which available nuclear flexibility was exhausted are associated with non-positive hourly day-ahead prices.

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What we can learn from public debt reductions in OECD countries

January 21, 2026

There was an interesting paper which suggested that focusing on debt to GDP ratio for measuring fiscal health may not be the right thing.  Having said that, debt to GDP ratio is still part of the major toolkit of economists. Rising ratio is seen as a bad thing and a decling ratio a goos thing.

This voxeu post by Álvaro Pina, Mauricio Hitschfeld and Takashi Miyahara summarises lessons from public debt reductions over last 25 years:

Public debt-to-GDP ratios have risen substantially over the past 25 years, and multiple spending pressures threaten to increase them further. This column outlines the lessons learned from episodes of successful debt reduction in OECD countries since the late 1970s. Sustained primary budget surpluses have been a key driver of declining debt ratios, reflecting favourable cyclical conditions coupled with consolidation efforts that have changed the composition of the public finances. Expenditure restraint has curbed subsidies and moderated the upward trend in pension outlays, while largely sparing healthcare and education. Corporate, but not personal, income tax revenues have strongly increased.

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Economics Math obsession: Delhi University’s BA (Hons) economics admission criteria

January 20, 2026

I was scanning Delhi University’s BA (Hons) Economics Programme:

The B.A. (Hons.) Economics curriculum offers a rigorous basis for much of the advanced thinking in the Economics discipline. It provides the student with a logical paradigm for conceptualising and interpreting the behaviour and interactions of households, firms, and government institutions. The curriculum allows students to choose elective courses from a set of courses with contemporary relevance, thereby offering students the flexibility to prepare for careers in academia, law, management, journalism, government, and many other fields. The programme is consistent with global standards in the Economics discipline. It offers training comparable to that of an undergraduate student at the world’s best universities.

Programme Specific Eligibility
Candidates must appear in CUET in any of the following subject combinations:

    • Combination I: Any one Language from List A + Mathematics/Applied Mathematics + Any two subjects from List B
    • Merit will be based on the best CUET scores obtained from any of the above-mentioned combinations of subjects.

List A has following languages:

  1. English,
  2. Hindi,
  3. Assamese,
  4. Bengali,
  5. Gujarati,
  6. Kannada,
  7. Malayalam,
  8. Marathi,
  9. Odia,
  10. Punjabi,
  11. Tamil,
  12. Telugu,
  13. Urdu

List B has following subjects:

1. Accountancy / Book keeping
2. Agriculture
3. Anthropology
4. Biology / Biological Studies /
Biotechnology / Biochemistry
5. Business Studies
6. Chemistry
7. Environmental Studies/ Environmental
Science
8. Computer Science / Information
Practices
9. Economics / Business Economics
10. Fine Arts/ Visual Arts/ Commercial Arts
11. Geography/ Geology
12. History
13. Home Science
14. Knowledge Tradition – Practices in
India
15. Mass Media/ Mass Communication
16. Mathematics/ Applied
Mathematics
17. Performing Arts (Dance, Drama,
Music)
18. Physical Education (Yoga, Sports)
19. Physics
20. Political Science
21. Psychology
22. Sanskrit
23. Sociology

Based on the criteria, only compulsory subject to do economics (hons) is math. Whether you pick economics or not in List B is a choice. This is bizarre. I understand that math should be there given the math obsesssion but no economics? We see similar math obsession in BBA, BA Hons Business economics and Bachelor of Management Studies. B. Com (H) has a choce of either math or accountancy. Thank god for that.

In all the other BA Hons courses such as History, Geography etc.  one sees a similar pattern. They dont ask for math but also dont ask to have the major subject. This is bizarre. I mean the major subject should be compulsory followed by others.

However, when you look at sciences, the criteria is to have science subjects.

One wonders what to make of these choices especially in economics and management courses.

 

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A Brand Under Stress: Did Chicago School Economists Become Keynesians During the Great Recession?

January 20, 2026

Gabriel Russ-Nachamie of Davidson College in this paper:

In this paper, I examine whether Chicago School economists revised their long-standing opposition to fiscal stimulus during the Great Recession. I construct a historical narrative from a corpus of primary documents spanning January 2007 to December 2012. I include an economist in my sample if they meet three criteria: i) obtained a PhD in economics from the University of Chicago; ii) held a tenured professorial appointment in economics or finance at the University of Chicago before January 1, 2007, and during 2007-2012; and iii) publicly identified as a member of the Chicago School of Economics. I find that economists in my sample largely opposed fiscal stimulus during the Great Recession.

 

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Why Hume is better at explaining modern capitalism than Marx?

January 19, 2026

Catherine Nichols , a freelance writer based in  New York City writes why Hume is better at explaining modern capitalism than Marx:

Describing the political map in terms of Left and Right is an accepted convention all over the world, almost to the point of cliché. Yet it is surprisingly complicated to explain whose interests lie on each side of this spectrum. For example, if the Left supports the interests of workers over the interests of employers, why are Left-leaning regions of the United States and elsewhere in the world among the richest? When Japan and South Korea sought to become economic powerhouses in the later 20th century, they adopted Leftist policies such as strong public education, universal healthcare and increased gender equality – if countries seeking to compete in capitalist arenas adopt broadly Leftist policies, then how do we explain why Leftists are always talking about overthrowing capitalism? And if the Left is somehow both the party of workers’ rights and the party of material wealth, then whose interests are supported by the Right? Given such contradictions, how did these terms become so central to modern politics?

The terms ‘left’ and ‘right’ come from the seating arrangements in the National Assembly during the French Revolution, where the combatants used the medieval estate groupings to define their battle lines. According to their writings, land-owning aristocrats (the Second Estate) were the party of the Right, while the interests of nearly everyone else (the Third Estate) belonged to the Left. This Third Estate included peasants working for the landowners but also every other kind of business owner and worker. Decades later, Karl Marx offered a different analysis of capitalism: he put owners of both land and businesses together on one side (the bourgeoisie), while grouping workers from fields and factories on the other side (the proletariat) in a single, world-wide class struggle. The trouble with both these ways of parsing Left and Right is that voting patterns never seem to line up with class. Both historic analyses leave us with questions about the contemporary world – and not just the paradox of why so many Left-leaning places are so rich. Why, for example, do working-class conservatives appear to vote against their material interests, year in and year out, across generations?

The 18th-century philosopher and political theorist David Hume had answers to these questions, though he was writing decades before the French Revolution. While his essay ‘Of Public Credit’ (1752) was a warning about the dangers of Britain’s increasing reliance on debt financing, his apocalyptic vision of the future turned out to describe some features of our current political map surprisingly well. Hume was writing because he believed that debt financing had the power to upend Europe’s traditional power structure and culture by creating a new source of money divorced from tradition or responsibility: stocks and bonds. Unlike land, anyone with some cash could buy war bonds and get an immediate passive income in the form of interest. This was the thin end of the wedge caused by the debt financing that Hume believed was destroying every part of society. The governments of antiquity, Hume argued, saved money to use in battle and then waged wars in self-defence, or else to expand their territory. But the British had invented a new form of warfare that Hume saw no precedent for, even in the merchant states of Nicollò Machiavelli’s Italy: war for trade, funded with money borrowed from private stockholders.

Hume acknowledged the potential for riches in securing trade routes overseas, but the debts worried him. Of the many downsides to the practice of borrowing money in pursuit of empire, possibly the most interesting is that Hume foresaw what the historian Richard Whatmore in The End of Enlightenment (2023) describes as ‘an addiction to the idea of liberty among the populace and politicians’. Once Hume realised the connection between liberty and debt financing, he lost his taste for the philosophical concept entirely.

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Book Review:  Why Nations Fail by Daron Acemoglu and James A Robinson

January 19, 2026

Book Review:  Daron Acemoglu and James A Robinson. 2023. Why Nations Fail.
By Annavajhula J C Bose, PhD
Former (Economics) Professor, SRCC, DU

Read the rest of this entry »

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The Central Bank Balance-Sheet Trilemma

January 16, 2026

Burcu Duygan-Bump and R. Jay Kahn of Federal Reserve present a new trilemma, thaू of central bank balance sheets:

In this note, we offer a framework for understanding the tradeoffs involved in determining the optimal size and behavior of a central bank’s balance sheet. Specifically, we highlight that central banks face a “balance sheet trilemma,” in that they can achieve only two of the following goals at once:

    1. a small balance sheet,
    2. low volatility of short-term rates, and
    3. limited market intervention.

The underlying tension between these goals arises from the financial sector’s demand for reserves and the frequency of sudden changes in liquidity demand and supply.3 Figure 1 displays these options visually.

Figure 1. The balance-sheet trilemma visualized
Figure 1. The balance-sheet trilemma visualized. See accessible link for data.

Compromising on any of the three goals carries significant costs: 1) A large balance sheet increases the central bank’s structural footprint in financial markets and could crowd out private sector credit intermediation. 2) High money-market volatility can dampen rate control, impeding the implementation of monetary policy and leading to unexpected funding stress and liquidity shortages. 3) Frequent market interventions expand the central bank’s footprint through daily market operations, potentially impairing price discovery and market discipline. To be sure, the central bank can opt for an interior solution and tolerate some rate volatility (for instance, around calendar quarter-ends), some extra market operations, and a slightly larger balance sheet. But we hope the trilemma framework laid out here clarifies the tradeoffs central banks face.

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How central banks are using creativity and deploying visuals to communicate monetary policy

January 16, 2026

David Barkhausen, Gabriel Glöckler and Stefan Ruhkamp of ECB explore the creativity of few central banks to communicate their monetary policy to public:

In today’s world, a wealth of information meets with a poverty of attention. Central banks are special in many ways, but they cannot escape the laws of the attention economy. To be effective and legitimate, they, too, must find ways to get through to the people they serve.[1]And these are not just economists, bankers and financial analysts, but also the general public. Next to financial markets, it is also the average person’s economic behaviour that central banks seek to influence to preserve monetary and financial stability. But monetary policy is complex and often quite boring. Many people neither know – nor care – much about it.[2] For decades, central banks in many countries have tried to remedy the lack of financial literacy and the “rational inattention” of their populations by offering basic education on how the economy and currencies work. But now they are going one step further.

Interesting post.

Posted in Academic research & research papers, Blogs to Read, Central Banks / Monetary Policy, Economics - macro, micro etc, Financial Markets/ Finance | Leave a Comment »

Spillover effect: New Zealand foreign minister criticises RBNZ Governor for Powell statement

January 15, 2026

I knew this was coming. When Central Bankers issued a joint statement supporting Fed chair Jerome Powell, I had posted:

What will US President do next? Ban these central bank governors from entering US? Or ask their Presidents to fire these central bank governors? Anything is possible. All possibilities are open.

New Zealand foreign minister has rebuked RBNZ Governor Anna Breman to remain in the NZ lane:

“The Reserve Bank of New Zealand (RBNZ) is statutorily independent of central Government on matters of monetary policy. However, the RBNZ has no role, nor should it involve itself, in US domestic politics,” the Foreign Minister said in a statement.

“We remind the Governor to stay in her New Zealand lane and stick to domestic monetary policy. That would have been the advice of the Ministry of Foreign Affairs and Trade if the Governor had sought its advice, which she did not.”

Asked for a response, a Reserve Bank spokesperson said “we have no further comment.”

This is like those spillover impacts in economics. A crisis in a big economy usually US spillsover to other economies. Here the crisis of Powell and Fed independence is spilling over to central bankers and central banks of other economies.

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Russia plans new economics textbook reviving Stalin-era ideas

January 15, 2026

Change starts with textbooks. From Russia:

Russia is preparing a new economics textbook for university students that aims to challenge what its authors call a “myth” that democracy drives economic growth and to revive the socialist economic theories of Soviet leader Josef Stalin, the head of a Kremlin-linked advisory body said.

Moscow has ramped up efforts to enforce its view of history and global politics in schools since launching its full-scale invasion of Ukraine in 2022, introducing mandatory patriotic classes and rewriting history curricula to align with the Kremlin’s wartime narratives.

Valery Fadeyev, chairman of Russia’s presidential human rights council, told the RBC news website that he is leading work on the textbook, which could be introduced as early as the next academic year for students of sociology, political science and history.

The 350-400-page book, tentatively titled “Essays on Economics and Economic Science,” is intended to present a broader view of economic development than mainstream liberal theory, Fadeyev said.

“Our task is not to refute anything or denounce liberalism,” Fadeyev said. “Liberalism is simply too narrow. Our task is to show students the full complexity of life.”

Fadeyev said the textbook would avoid extensive mathematical modelling, arguing that some highly mathematical areas of modern economics have little connection to real-world science.

The book will also challenge what Fadeyev described as widespread assumptions about the economic benefits of democracy and the harms of protectionism.

“If we look at economic history, and this is described even in Western textbooks, economic growth has always taken place in countries with more or less strict regimes,” he told RBC.

Fadeyev said he was not opposed to democracy but argued that Russia’s own development took place under Soviet rule in conditions of strict political control.

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America is now being led by gangsters and its least moral individuals

January 15, 2026

Noah Smith blogged in March 2025:

I’m going to talk about the geopolitical and domestic political implications of Trump’s Zelensky meeting in a bit, but first I want to place Trump and Vance’s contempt for Ukraine in the context of something else that’s been bothering me more and more recently — a general collapse of America’s public morality.

The world is not made up of heroes and villains, like in Star Wars or a Marvel movie. Instead, like the Game of Thrones universe or a dark edgy comic book, the world is made up of antiheroes and villains. The kindest person you ever meet will have some moments of cruelty in their life; even the most upright and honest bend the rules once in a while; even people fighting for noble causes will have times when they’re selfish, arrogant, and greedy.

And yet even so, there are enormous moral differences between individual human beings. There are people for whom greed, selfishness, and cruelty are not occasional lapses, but a way of life. There are true villains in this world. Everyone knows this on some level, and we’ve organized large parts of our societies around trying to police the true villains and keep them from attaining power. But society is always at a disadvantage, because villains work around the clock; people who crave power and dominance spend all of their waking hours trying to get it, while normal, flawed people can only spend part of their time policing them.

If normal people were heroes, it would be easier to keep villains out of power. But normal people are antiheroes — they will kowtow to power when sufficiently threatened, they will take a bribe if it’s sufficiently large. Every man has his price, and the villains have deep pockets.

And the villains have a lot of practice using normal people’s flaws to divide them. When society is politically divided, power-hungry people exploit those divisions to rise to the top — we tell ourselves “He may be a bad guy, but he’s a bad guy on my side.” At least Hitler will fight the communists; at least Stalin will keep the capitalists at bay.

And like a movie antagonist who says “We’re not so different, you and I,” real villains are always screaming at the top of their lungs about the tiniest flaw in the moral character of their opponents. If Star Wars were real, the galactic internet would be flooded with screeching tirades about Han Solo’s criminal past, how Princess Leia got her position through nepotism, or how Luke Skywalker once made out with his sister.

Americans who pay attention to the news — conservatives and liberals alike — are slowly starting to realize that the people we’ve put in charge of our country are among our morally worst.

Well, what can be done now? The worse bit is this is not happening for the first time. It happens over and over again across time, across countries.  People keep electing strongmen (usually men) believing that their country needs  astrongman to help them get rid of crises and conflicts. They never realise that most strongmen are amoral and have no sympathy/empathy for people. Such leaders rise to power crushing people, opposition and voices. Strongmen hide behind nationalism and commit all kinds of crimes. The citizens cheer these actions initially only to realise that eventually they will be called out as well. Amoral individuals can go to any extent to get and retain power.

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Evaluation of the Riksbank’s monetary policy: 2015-2024

January 15, 2026

Swedish Parliament’s Committee on Finance had appointed a committee to conduct an external evaluation of the central bank. The committee members were Morten O. Ravn (of University College London) and Carolyn A. Wilkins (of Princeton University).

The review report was submitted recently. Summary:

Our assessment draws on three complementary analytical approaches.  First, we adopt a historical perspective, recognizing that Sweden’s macroeconomic framework, shaped by reforms implemented after the early 1990s crisis, continues to influence today’s policy choices. Second, we ground our evaluation in economic theory, empirical evidence, and comparative experience, drawing on lessons from peer central banks.  Third, we incorporate qualitative insights from extensive interviews with policymakers, Riksbank staff, academics, and market participants, which helped us understand how decisions were made under uncertainty and how the policy framework functions in practice.

Throughout the evaluation period, the central question is whether the Riksbank achieved its objectives while maintaining credibility, managing risks, and coordinating effectively with other institutions. Sweden entered the period with a strong institutional foundation. This included an established inflation-targeting regime, stringent fiscal rules, a separate macroprudential authority at the Finansinspektionen (the FSA), and a National Debt Office (the NDO) responsible for debt management and crisis-liquidity operations. Even so, experiences over the decade considered in this evaluation exposed some shortcomings in how monetary-policy and other authorities interact, even in times of crisis.

Overall, we find that the Riksbank acted with determination in exceptionally challenging circumstances, and many decisions were reasonable given the information available. With the benefit of hindsight, some weaknesses and areas of underdevelopment are now evident: the scale and composition of QE; limitations in risk assessments, including implications for the balance sheet and capital needs; forecasting weaknesses; and gaps in the relationship between monetary policy, fiscal policy, and debt-management authorities.

Taken together, these issues call for targeted reforms, not a wholesale redesign of Sweden’s monetary policy framework. 

Central Bank welcomed the findings:

“Transparency and continuous evaluation are central to building confidence in the Riksbank’s mission. The Committee on Finance’s external evaluation is an important contribution to the Riksdag’s work on following up monetary policy and the objective set for the Riksbank. We will now go through the report carefully and return with our comments on the conclusions in connection with the Committee on Finance’s hearing on the report on 17 February and in our coming statement”, says Governor Erik Thedéen.

In autumn 2024, the Committee on Finance decided to conduct an external review of the monetary policy conducted by the Riksbank in the years 2015-2024. This is the Committee on Finance’s fifth external evaluation of monetary policy in a longer-term perspective. These evaluations are a complement to the Committee on Finance’s own annual reviews and its open hearings with the Governor and Deputy Governors of the Riksbank.

RBI’s monetry policy should also be reviewed by external experts.

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The economics of natural capital

January 14, 2026
Andrej Ceglar, Ivan Jaccard, Miles Parker, Alexander Popov and Francesca Zucchi discuss the importance of considering natural capital in growth models in this ECB article:
We develop a framework underscoring the importance of incorporating natural capital into growth models and policy discussions, recognizing its role as a productive input and as a sourceof enjoyment. Both firms and the government face the trade-off between exploitation and conservation and can (but do not have to) engage in costly conservation. Firms optimally conserve natural capital to support future production but underinvest compared to the social optimum. Public conservation complements private action, shifting focus from current consumption to future growth. Unique region-level data on the biodiversity of the forest in 582 regions across 44 countries confirm the main empirical predictions of the model.

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