This means that the discussions conducted by the Executive Board take place on an open stage, almost, through the publication of the minutes from the monetary policy meetings and through the speeches held. In many other central banks these differences of opinion never see the light of day. 27  Svensson (2012a). The estimate is of course uncertain. As shown in Svensson (2012a), a 95-per cent confidence interval for the estimate 1.3(=1/0.75) percentage points gives an interval between 1/1.1= 0.9 percentage points and 1/0.4=2.5 percentage points, corresponding to a confidence interval for the estimate 65,000 unemployed between 45,000 and 125,000. An estimate using the Riksbank’s model Ramses, in accordance with the effects of various repo-rate paths as described in Svensson (2010), leads to roughly the same estimate of 1.2 percentage points. 28  If 3 percentage points lower unemployment corresponds to around 10 per cent higher housing prices, then 1.3 per cent higher unemployment will give roughly 1.3*10/3 = 4.3 per cent higher housing prices. 29  With even higher inflation and an inflation rate above the target, which according to Qvigstad’s (2005) criteria is justified when unemployment is higher than the long-run sustainable level, unemployment could have been even lower, and housing prices marginally higher. BIS central bankers’ speeches  13  This openness naturally has consequences, and not all of them positive.
From this we should deduct a figure for sustainable growth in disposable income, say 4 per cent – 2 per cent real growth and 2 per cent inflation. This leaves us with 1 per cent. See Svensson (2012b). 8  BIS central bankers’ speeches  The household debt situation is also analysed in Finansinpektionen’s (the Swedish financial supervisory authority) report, The Swedish Mortgage Market. Finansinspektionen observes in this report that the loan-to-value cap has had an effect. Households’ loan-to-value ratios for new loans fell in 2011, and the percentage of houses with a loan-to-value ratio of more than 85 per cent has halved since 2009, to just under nine per cent. The banks make stringent credit assessments of borrowers using a “left-to-live-on” calculation with a high mortgage rate.17 Stress tests also show that most households that have taken out a new mortgage and which should be the most vulnerable, have a good debt-servicing ability and are resilient to increases in interest rates, falls in housing prices and increases in unemployment.18 In contrast to what was the case during the 1990s crisis, however, large interest rate increases probably will not coincide with high unemployment. Finansinspektionen’s conclusion is that “Only a limited portion of the households are affected even when simultaneously applying assumptions of sharp drops in house prices and sharp rises in unemployment, which indicates that Swedish mortgages are currently not a threat to financial stability.“ Moreover, this resilience has also been tested in real time.