The Swedish External Position and the Krona

46 Pages Posted: 19 Jan 2007

See all articles by Philip R. Lane

Philip R. Lane

Trinity College (Dublin) - Department of Economics; Centre for Economic Policy Research (CEPR); Central Bank of Ireland

Multiple version iconThere are 2 versions of this paper

Date Written: November 2006

Abstract

This paper addresses the dynamics of the Swedish external position, with a particular focus on its inter-relation with the external value of the krona. We argue that financial globalisation means that a broader conceptual framework is required, whereby exchange rate fluctuations operate through the "valuation channel" of external adjustment, in addition to the traditional trade balance channel. In the other direction, we highlight that the projected trend for the trade balance is an important influence on the long-term prospects for the krona. Finally, we seek to assess the future direction for the Swedish net foreign asset position by investigating the likely impact of demographic change and shifts in the Swedish position in the world income distribution.

Keywords: real exchange rate, external adjustment, Sweden

JEL Classification: F0, F2, F3

Suggested Citation

Lane, Philip R., The Swedish External Position and the Krona (November 2006). IIIS Discussion Paper No. 197; Riksbank Research Paper Series No. 31; Sveriges Riksbank Working Paper No. 200 . Available at SSRN: https://ssrn.com/abstract=958041 or http://dx.doi.org/10.2139/ssrn.958041

Philip R. Lane (Contact Author)

Trinity College (Dublin) - Department of Economics ( email )

Trinity College
Dublin 2
Ireland
+353 1 608 2259 (Phone)
+353 1 677 2503 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Central Bank of Ireland ( email )

P.O. Box 559
Dame Street
Dublin, 2
Ireland

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