The quantitative effects in the scenario are estimated using the Riksbank’s macro model for the Swedish economy, but such estimates entail a degree of uncertainty and other empirical approaches could lead to different results. A common result in the research literature is that if we take into account the fact that there is uncertainty about the impact of monetary policy then we should act more gradually over time. However, it may then take longer for inflation to approach the target and for resource utilisation to normalise than if we do not take such uncertainty into account.3 This line of reasoning may therefore mean that a higher repo-rate path is better balanced than the example’s lower path, despite the fact that it will take longer for inflation to reach the target. Put another way, if we are not absolutely certain about the outcome of monetary policy it is better to proceed gradually. Moreover, the repo rate is already low at present at the same time as we are seeing more and more signs that economic activity is picking up and at the same time as there are risks associated with household indebtedness. I would like to begin by discussing why household indebtedness has affected my stance on monetary policy. Risks and rewards must be weighed against each other Asset managers think in terms of risks and rewards.
Luis M Linde: Overview of Spain’s economy in 2012 – reflection and outlook Testimony by Mr Luis M Linde, Governor of the Bank of Spain, before the Parliamentary Committee on Economic Affairs and Competitiveness, Madrid, 20 June 2013. *  *  *  Ladies and gentlemen, I appear before this Committee on the occasion of the presentation of the Banco de España Annual Report for 2012, one of the most difficult years for the Spanish economy of the last decades. I shall begin with a review of the general economic situation, and then focus on the progress achieved in restoring the major balances of our economy, developments in credit and in household and corporate debt, the headway in balance sheet clean-up and restructuring of our banking system, financial regulation reforms and progress in the European Banking Union project. I shall conclude with a reflection on the outlook for our economy. Situation of and outlook for the Spanish economy Throughout 2012 the Spanish economy held on the contractionary course that first became discernible in late 2011. GDP fell by 1.4% during the year, far above the 0.5% decline recorded in the euro area as a whole. This double-dip recession, the second dip of which is less acute in terms of the decline in output but more persistent than its 2008–2009 forerunner, has had particularly serious consequences for employment, which shrank for the fifth year running in 2012.