Why has inflation been so low?
Date
20/11/2015
Björn Andersson, Vesna Corbo and Mårten Löf analyse the reasons that inflation has been low in Sweden for a long time.
They study the development of inflation in more detail and focus on a number of possible explanations. Using a general equilibrium model, they also show how these various explanatory factors may have interacted to keep inflation unusually low over the last five years. The results indicate that weak international economic activity and low commodity prices, particularly for energy, have played a large part. For a period, an appreciation of the krona contributed towards the low inflation. In addition, over the two last years, companies' margins have been lower than normal, particularly as a result of increased competition and uncertainty over the future.
The article is included in this year's third issue of the Sveriges Riksbank Economic Review , which has been published today.
Björn Andersson, Vesna Corbo and Mårten Löf
The authors work in the Monetary Policy Department at the Riksbank.
