Erik Spånberg: The Swedish natural rate of interest and international spill-overs

Abstract: In Sweden, the Riksbank’s (Bank of Sweden) policy of negative interest rates amid an economic upturn has received a lot of criticism. The Riksbank, on the other hand, claims that it is global factors that have had a negative influence on domestic interest rates. We use a linear Gaussian state-space model to obtain an estimate of the Swedish natural interest rate and investigate if its decline can be traced to global spill-overs.