We can thus say that the cost in terms of unemployment of the fact that the average rate of inflation has fallen below the target is approximately 38,000 unemployed.11 As explained in my paper (Svensson 2012d) the sloping long-run Phillips curve is arguably relevant only when the average rate of inflation deviates moderately from inflation expectations and the target (for example deviations less than plus/minus one percentage point). In the case of larger average deviations it is likely that inflation expectations will eventually adjust. Inflation closer to the target would mean 65,000 fewer unemployed An increase in unemployment of about 38,000 people is the average cost for the tight monetary policy conducted during the period from 1997 to the end of 2011. So what is the cost of the tight policy being conducted now? How much lower would unemployment be now if a more expansionary monetary policy had been conducted during the past two years, as consistently advocated by my Executive Board colleague Karolina Ekholm and myself since summer 2010? Let us assume that inflation would have been one percentage point higher and thus been closer to the target now. According to my working paper (2012d), the slope of the long-run Phillips curve, 0.75, is not only relevant in the long run, but also a year or so ahead. A rate of  10  See Svensson (2012d). A 95 per cent confidence interval for the slope is given by 0.75 ± 0.35, that is an interval between 0.4 and 1.1.
This is in stark contrast to the situation in countries such as Australia, Canada and the United Kingdom which have had a fixed inflation target as long as Sweden. In these countries, the rate of inflation has been at or very close to the inflation target (in the case of the United Kingdom until the end of 2007).2 As, according to the Prospera surveys, inflation expectations in Sweden have been firmly anchored to the target since 1997,  1  See Svensson (2011) for a comparison of monetary policy in Sweden and the United States since the summer of 2010, including which monetary policy has been better balanced. 2  As discussed in Svensson (2012d), Australia has had an inflation target in the form of an interval between 2 and 3 per cent, that is, with a midpoint of 2.5 per cent, since the middle of 1993. Average inflation for the period 1997–2011 was 2.7 per cent. Canada has had an inflation target since 1991 and the target has been 2 per cent since 1995. Average inflation for the period 1997–2011 was 2.0 per cent. The United Kingdom has had an inflation target since the end of 1992. From 1996 to 2003 the target was 2.5 per cent measured using the RPIX index. Average RPIX inflation for the period 1997–2003 was 2.4 per cent. Since 2004, the target has been 2 per cent measured in terms of the CPI. Average CPI inflation for the period 2003–2007 was 2.0 per cent.