Summary

In October next year, Jean-Claude Trichet will retire from his successful job as the president of the European Central Bank (ECB). Two current central bank governors are currently mentioned as the main candidates to succeed Trichet, the German Axel Weber and the Italian Mario Draghi.  There is no doubt about the need of a strong, stability-oriented new ECB leader. Insufficient fiscal policy in most EMU countries cannot be accompanied simultaneously by a weak monetary policy. Such a combination could do a lot of harm to the euro. In this context, Axel Weber, the stability-oriented, inflation-fighting inheritor of the permanently stability-oriented Bundesbank should be given (somewhat) more confidence by global financial markets than his competent academic colleague Mario Draghi. But Draghi has strong supporters in a number of EMU countries.

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1. Om cirka 18 månader är det dags for fransmannen Jean-Claude Trichet att lämna över ECB-rodret till sin efterträdare. Trichet har tveklöst gjort ett bra jobb. Många marknadsaktörer trodde inte riktigt på honom för sju år sedan. Men Trichet lyckades förvalta ECB i stil med en f d Bundesbank-president, under en längre tid tillsammans med sin chefsstrateg och f d Bundesbank-chefsstrategen Otmar Issing.

2. Följaktligen kommer kraven på ECB:s nya toppledning att vara stora. Snart är det meningen att Portugals nuvarande centralbankschef Vítor Constâncio tar över som vice chef i ECB, vilket retat det relativt inflytelserika Luxemburg alldeles enormt. Luxemburg ville se sin nuvarande centralbankschef, den erfarne och ideologiskt envist inflationsbekämpande Yves Miersch som ECB:s nya nummer två. Constâncio ersätter den teoretiskt och akademiskt kunnige Lucas Papademos, som för närvarande också basar över ECB:s forskning. En viktig detalj är således, var ECB:s duktiga forskningsavdelning kommer att hamna. Svaret på denna fråga har sannolikt med den framtida presidentutnämningen att göra.

3.  Helt klart torde vara att Weber och Draghi kommer att förbli huvudkandidaterna (även om till exempel Cyperns Orphanides också har en utomordentligt intressant bakgrund). För närvarande görs tolkningen att ”höken” Mierschs nederlag om viceposten banar väg för ”höken” Weber som president (även om jag själv inte gillar dessa epitet; en centralbank bör agera efter sitt uppdrag och ingenting annat). Helt avgjort är dock inte racet.

4.  Framför allt är inte avgjort, var Frankrike kommer att placeras i ECB:s ledning. Det kan knappast tänkas att Frankrike frivilligt kommer att avstå från en sådan maktposition. Lika lite är det troligt att Tyskland kan ha två representanter i ECB:s högsta ledning, det vill säga både Weber och nuvarande chefsekonomen Jürgen Stark. En tänkbar lösning av detta problem vore att Weber och Stark helt enkelt gjorde en rockad mellan Bundesbank och ECB.

5.  Just nu talas mycket om att IMF:s chefsekonom, den kände franske MIT-professorn Olivier Blanchard, skulle ta över rollen som chefsekonom-/strateg i den nya ECB-ledningen. Blanchard är visserligen en stor ekonom. På sistone framkallade han dock mycken irritation – även hos Axel Weber – med sitt IMF paper ”Rethinking Macroeconomic Policy” (tillsammans med kollegerna Dell’Arricia and Mauro) genom att ställa frågan om kostnaderna för en inflation något över det låga 2-procentmålet verkligen är högre än för den mer hårdhänta inflationsbekämpningen. (”Is it more difficult to anchor inflationary expectations at 4 percent than at 2 percent?”).  Å andra sidan finns fler franska ekonomer av hög klass som mycket väl skulle lämpa sig för chefsekonomjobbet i ECB.

6.  Kruxet är dock att franska ekonomer – trots mycket god generell ekonomisk kunskap – är behäftade med det historiska ryktet att de tar det något lugnare med låg inflation, stabil valuta och sunda statsfinanser, när tider är dåliga. Det är här risken finns om president Sarkozy skulle lyckas få en landsman på chefsstrateg-/chefsekonomposten.

7.  Ytterligare ett problem kan komma att uppstå genom att två kompetenta Bundesbankledare snart måste ersättas genom personer med politisk acceptans hos förbundsregeringen i Berlin och delstatsregeringarna i Schleswig-Holstein och Mecklenburg-Vorpommern. De nu föreslagna kandidaterna innebär en icke negligerbar kompetensutarmning, vilken hotar att bli ännu större om Weber växlade till ECB. En sådan möjlig försvagning av ECB-systemets viktigaste nationella centralbank skulle också kunna leda till en del farhågor och – i värsta fall också risker för euron.

8.  Det pågående tyska exemplet visar tydligt att politiker vid utnämningar alltför ofta tenderar att värdera rätt partibok högre än expertkompetens. Här finns också den mest påtagliga risken i ECB:s påbörjade viktiga utnämningsprocesser (i detta fall med starkt eftersträvad representation av vissa länder i ECB:s högsta ledning). Hittills har ECB:s regeringschefer matchat uppgiften att hitta en bra och samtidigt kompetent nationell mix av ECB-ledare med betyget ”mycket väl godkänt”. Lyckas man även denna gång?

9.  I detta sammanhang kan påpekas att det svenska utnämningssystemet för Riksbankens direktionsmedlemmar blivit mycket bättre under det gångna årtiondet, även om fördelningen mellan vetenskap, makro-, mikroekonomi och rena finansmarknadsexpertis inte alltid varit optimal.

10.  Sammantaget:  Det framstår som extremt viktigt att ECB under de kommande 7-8 åren kommer att ledas av två ytterst trovärdiga ledare med hög kompetens och trovärdighet. Dessa två krav ter sig speciellt viktiga med tanke på de enorma finanspolitiska utmaningarna som ett antal EMU-länder fortfarande har framför sig. Dessa snedvridna skuldförhållanden gör en trovärdig penningpolitik från ECB:s sida – måhända – ännu viktigare än hittills. EMU-länderna, euron och även resten av Europa har inte råd med en ny kris, framkallad av otillräcklig tilltro till ECB:s kommande toppledare.

Sammanfattning

Det råder ingen tvekan om att alltför många bankledares analytiska inkompetens och korta minne, felaktiga incitamentsstrukturer i bankerna, undermålig risk management och inte minst kortsiktiga vinstmaximeringsintressen i hög grad bidragit till den globala finansiella krisen. I motsats till många andra bedömare anser jag dock inte att bankerna genom lättvindig finansiering gjort sig skyldiga till den akuta Grekland-krisen.

Det är snarare E(M)U-politikerna som alltför okritiskt accepterade Greklands EMU-inträde år 2000 och Tysklands/Frankrikes tidigare ovilja att klara stabilitetspaktens budgetkrav – och givetvis den politiska och statistiska oredan i Hellas.

Som vi vet idag har den politiska nonchalansen gjort hela stabilitetspakten mer eller mindre tandlös.  Dessutom trodde alltför många politiker i ett antal mindre EMU-länder alltför länge att deras blygsamma andel i eurolands BNP skulle skydda dem från finansmarknadernas attacker vid eventuella större egna obalanser. Så tänkte man också i de baltiska länderna. Det sker ännu idag.

Grekland-krisen ger en mer än tydlig varning om att EMU-medlemskap inte automatiskt innebär ett ”evigt” skyddsnät för mindre EMU-länder med tunga strukturella obalanser – och givetvis inte för ett stort, potentiellt utsatt land som Spanien heller (fastighetskris och sparbanker i kläm). Det gamla ordspråket från finansmarknaden – ”stability begins at home”- gäller alltjämt. Denna erfarenhet borde framstå som maxim för en nödvändig effektivisering av stabilitetspakten.

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Many bank managers and executives showed serious proofs of lacking competence, greed, short memory, wrong incentives, illogical behavior, etc., during the global financial and economic crisis. Many of these serious accusations were highly motivated. But banks cannot be blamed for all kinds of insufficiency in monetary policy, supervision, rating, and for many consumers’, investors’ extreme irrational exuberance, and political mistakes.

Recently, banks also have been accused of having neglected the long-time financing risks in Greece, particularly some U.S. banks. This is a tough call. But I suggest that the banks should not be charged more than marginally with their impact on the Greek economic crisis. Instead, E(M)U politicians – with Germany and France in the frontline – should be mainly blamed for the ongoing problem in Greece and other Southern European EU countries. In the mid 1990s, German pressure to create and implement the so-called “Stability Pact” was the only right macroeconomic answer to EMU opponents and scientists who especially referred to Mundell’s skepticism about asymmetric shocks in monetary unions. Around a decade later – in 2004 – Germany and France missed the budgetary target for annual budget deficits (3 percent of GDP) for the third year in a row. According to the Stability Pact – which originally was initiated by the German minister of finance, Theo Waigel – annual budget deficits of E(M)U countries should not exceed 3 percent of GDP. After three years of violation of this target, quite substantial penalties should have followed.

However, the poor fiscal developments of Germany and France were not accompanied by penalties that are part of the Stability Pact. Thus, these two biggest EMU countries got special treatments, undermining conditions for future fiscal discipline in Euroland. If the penalty rules of the “Stability Pact” had been applied carefully to Germany and France, much more pressure could have been made in the following years on the imbalanced Southern European economies. Now, time has really come to achieve a more efficient stability pact, to demand more responsibility for macroeconomic stability from ignorant European politicians and – maybe – to create an EU stabilization/country rescue fund.

Furthermore, nobody can tell me that most of the Greek problems were unknown when Greece entered the euro in 2000 and during the first years of its EMU membership. Many economists – included myself – wrote about Greece’s “creative bookkeeping” of government finance already eight years ago. But why did important European institutions refrain from looking behind the Greek statistical shortcomings and cheating during the past five to eight years? Why was this insufficient pressure on Greece?

My answers to this question look like follows: First, there was this malign neglect of the Germans and French deficits which probably put the Greek issue down on the observation list. Second, there was a general initial mood of overconfidence about the new European monetary and currency system. Third, there was at this time a feeling for countries of “to small to fail” on both financial markets and in governments. For instance, when I around 2004 and 2005 many times pointed at the current account risks in the Baltic countries, a frequent reply was that “financial markets never will speculate against the small Baltic currencies”.

Four years later, the financial world and 7.4 million people in the Baltic states experienced dramatically that this theory was wrong. Similar comments aiming at “too small to fail” could also be noticed about Greece in the past few years – though not very frequently. By hiding their risk management behind the big Euroland curtain, too many bankers and economists applied the view of the ECB that the euro area must be seen as one homogeneous economic area. Of course, this is true of monetary policy of the ECB – but certainly not in a country risk perspective. However, one should not forget that the EMU was launched by its founders as a very safe institution (which it really is when politicians are doing their homework; for this reason the Greek failure is no good argument against the euro per se).

The most important conclusions: There are still individual country risks in the EMU area for small countries – but, of course, also for big countries like Spain (big  estate problems and very exposed savings  banks).  Since the euro in the beginning of this decade was a new phenomenon, it was not absolutely foreseeable that the imbalances of the small EMU member of Greece could be turned into a  negative global financial spiral – and certainly not for the banks’ strategists either.

However, the current  dark Greek experience should be another strong warning signal to the Baltic countries to avoid a premature joining of the euro. Just a few years from now would most probably be by far too early.

Summary

#  Looking at Chinese statistics and recent developments – without considering statistical quality at this point – leads to the (current) conclusion that China has managed the global financial economic crisis quite well. However, good economic growth was maintained by massive injections of fiscal stimuli and incredibly easy monetary conditions for new credits. Of course, these enormous injections into the economy now lead to concerns about the quality of new loans, of new investments and future inflation. Around 60 per cent of the big stimuli package has gone – or is about to go – to state-owned companies. This tells us quite a bit about future risks for the banks and the economy as a whole.

Current cautious measures to reduce the rapid rate  at which new loans are granted are not a wise precautionary step to dampen speculation and overheating – as it has been said in many comments – but rather an attempt to minimize damage after last year’s Formula 1 speed.

#  New own China Survey (Feb, prel, final results after New Year’s vacation):

Overheating indicator: 8.4 (peak since its start in fall 2004,  Mar 2009:3.9).

Forecast GDP growth 2010: 9.4 percent     2011: 9.0 percent.

#  Still, my own main scenario – which I made before the panel survey – is that China will achieve quite a good GDP growth in 2010, in the range of 9-9 ½% percent, despite more tightening of credit conditions and uncertain global conditions. Two interest rate hikes by totally 0.54 percentage points are implemented in this rate forecast. This is not a very scary tightening (however, it could turn out to be somewhat more than this). In all: The risks for this year’s development should not be neglected, particularly when it comes to inflation. There is a non-negligible probability that inflation will exceed the unofficial “comfort ceiling” of 4 percent.

#  More skepticism should be applied to 2011 – unless the global economy recovers more rapidly than currently expected. Next year, fiscal emergency stimuli will run out, credit conditions will be tighter, and the Chinese currency may return to its previous state of appreciating cautiously. Many imbalances will be – or remain – in place next year, too. For this reason, a somewhat lower range for Chinese GDP growth seems to be appropriate in 2011, around 8 ½ – 9 ¼ percent.

A warning may well be in order: China (risk) forecasts should be prepared more carefully than in the past. Following the herd is not good enough anymore.

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Recent and short-term future developments

Economic policy: This fourth generation of Chinese political leaders gets its main legitimacy from good economic growth, often defined as GDP growth not below 8 percent and up to the potential growth rate of 9 – or more exactly – 9 ½ percent  This range functions as a limit to growing unemployment on the lower side and – increasingly – as a ceiling against overheating in the economy. Awareness of this reality helps to understand the gigantic stimulus packages at the end of 2008. They contained mainly investment measures with the objective to significantly improve public investment (investment in total equivalent to 587 billion USD) and an order to the banks in late 2008 to flood the economy with new credits and cash, allowing a 28 percent increase in the money supply M2 over the past year. New credits in 2009 were three times the average of the years before. Foreign companies made direct investments (FDI) to the tune of a massive 90 billion USD in 2009. Thus, foreign confidence in China’s future remains high.

GDP growth / New China Survey No 10:

Chinese GDP growth in 2009 became more than I and most other China observers expected one year ago. I just missed one factor in the GDP forecast but, consequently, about 2 percentage points in additional growth. This mistake was caused by the underestimation of the strong growth contribution from the extremely loose credit policy by the PBoC. One may say that 8.7 percent GDP growth in 2009 (on average) and the 10.7 annualized growth rate in the fourth quarter 2009 have – and still have -  elements of dumping, like the huge fiscal package which runs through 2010.

These assumptions should be favorable enough to give China a GDP growth rate in the range of 9-9 ½ percent in 2010. In 2011, however, domestic growth forces may decline somewhat due to a tightening policy of the central bank and markedly less ambitious governmental investment plans. No major change should be expected in private consumption during the next two years. Thus, another big question is how exports will perform in the forthcoming quarters. All in all, I currently see a somewhat lower GDP growth forecast range for the year 2011, i.e. between 8 ½ and 9 ¼ percent. But this would not be bad either. China’s structural challenges are more long-term oriented.

At the same time, there are some preliminary results of my latest China Survey from February this year. (The final results will be published later in February). The most striking impression seems to be that our overheating indicator has reached its highest level since its start more than five years ago (8.4 compared to the previous peak at 7.9 in fall 2007, scale 1 – 10). Another interesting indication is that the panel so far expects some cooling off in 2011 which is line with my own expectations (Panels forecast: GDP qrowth rate 2010: 9.4 percent, 2011: 9.0 percent). Considering this forecast ceteris paribus: It will depend on the contribution of exports to economic growth whether the domestic overheating in China will become a less urgent problem or not.

Inflation:

Chinese inflation is now running at almost 2 percent – with a continuous upward trend (which also can be explained by the large rise in money supply without being a dogmatic monetarist). Sure, Chinese officials are worried about the worsening outlook for inflation. These worries, however, still are not reflected in the stance on monetary policy which remains quite loose. Recovery aspects are obviously still part of monetary policy, so far leading to a compromise that cannot effectively attack the roots of China’s inflationary threat. There is an obvious risk that Chinese inflation later this year can go through the unofficial “comfort ceiling” of 4 percent.

Credit policy / Monetary policy:

The risk is obvious that the government’s far too loose monetary policy – we could also call it credit policy like in the old Western days-  has contributed to the dumping of money into risky or unprofitable projects. Speculation was has flourished even stronger in the past 12-14 months. This may result in new, major credit losses for the banks a couple of years from now.

For this reason, it seems to be hard to understand why the OECD in its report on China published some days ago came to the conclusion that China “with the help of stimulus action, now is leading the world out of recession”. Even many Chinese economists have a more skeptical view of the contents of the stimulus packages than the OECD and most Western observers.

What gives even more reason for concern are the attempts by officials from the PBoC  to explain that their recent tightening still means an expansionary monetary/credit policy (i.e. despite the rise in the banks’ cash requirements at the PBoC, somewhat higher rates for T-bills and somewhat tougher payment rules for second-home buyers).  Assuming the continuation of an only slightly more restrictive policy by the central bank, there will still be at least twice the amount of new loans as in the years before 2009. Furthermore, if a negative inflation outlook is added, a more officially announced shift from favoring growth to some more efficient fight against credit exuberance and inflation should come in the forthcoming quarters, and may already be announced during the People’s Congress in March.

China must combat its financial imbalances, even if a considerable number of experts reject the conclusion that China is already being confronted with a dangerous bubble in the property and stock markets. What should not be neglected either is that inflation above 4 per cent is very unpopular in the political sphere because of the negative impact on the distribution of income.

The most likely scenario is therefore that China this year will go for at least two interest rates hikes with 0.27 percentage points each time (2+7=9, good number; 2+5=7, bad number). Another one or two hikes within the forthcoming year would certainly not be a surprise if GDP growth has become established on a relatively steady course. Anyway, credit and monetary policy will be characterized by the two goal conflicts described here, between credit expansion/asset speculation and higher inflation expectation on the one hand and growth/unemployment considerations on the other.  The unclear future stance of the PBoCs monetary/credit policy adds, of course, to uncertainty on the Chinese stock market which mostly is liquidity-driven.

Exchange rate policy:

China appreciated its currency against the USD by 20 per cent between the introduction of its more flexible exchange rate policy in July 2005 and the start of the severe global crisis in fall 2008. Since the latter part of 2008, China once again prefers a more or less fixed rate against the American dollar. I expect a return to the previous cautious Chinese appreciation policy in the latter part of 2010 or the first half of 2011 – but not before a more stable and good export performance has become visible for at least a couple of months. The developments of exports should be the benchmark for the Chinese exchange rate policy in the forthcoming quarters.

The increasing international role of China:

Recent developments show the increasing number of Chinese top positions in international ranking (by size, not per capita). An unemployment rate close to 10 per cent in the U.S. and a GDP growth rate in China of roughly 10 per cent can lead to economic and verbal conflicts between the two economic superpowers in the U.S. election year of 2010. China’s gradually decreasing interest in U.S. T-papers will continue. On the other hand, Chinese FDI expansion abroad has only just begun – as has the strategy to gain international financial influence, as recently seen by the Chinese offer to lend money to Greece and Moldova.

An unknown parameter is to what extent China will be acting in order to become the number two economy in the world already this year. Chinese progress in the past two decades has been remarkable. When I recently visited China, I noticed a lot of self-congratulation on different global rankings. On many occasions, the Chinese – when referring to the financial crisis – pointed out all the shortcomings of Western democracies and the problems in Western-style capitalism. Increased self-confidence also means that China will promote its domestic positions globally more than it has done in the past.

Furthermore it should be noted that China has become the main driver of commodity markets. This development affects Swedish companies and, of course, companies in the region of Jönköping as well.

Summary
Psychology is gaining momentum in economic research – though with visible opposition from traditional economists. “Happiness economics”, for example, still is in its scientific beginning. Better skills in “happiness economics” may contribute to neglected welfare gains in a society. The risks for political abuse in the shelter of “happiness economics” should be limited in a transparent and democratic country.

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Några dagar före jul eller före nyår gör man ofta ett facit över det gångna året. Har det gått bra? Har förväntningar på mig, mitt företag eller rent av mitt land infriats? Finns det anledning att vara glad?

Dylika funderingar må osökt leda till en vetenskapsgren som på senare år fått ökad uppmärksamhet – ”happiness economics” (lyckans ekonomi). Vad är egentligen den ekonomiska politikens ultimata mål?

Skotten Adam Smith ställde för cirka 250 år sedan strävan efter lyckan som främsta mål för all ekonomisk aktivitet. Drygt 150 år senare konstaterade dock den engelske ekonomen Alfred Marshall att ekonomin inte längre var inriktad på ”human well-being” utan snarare på materiella önskemål (”material requisites”).

Under 1900-talet konverterades ekonomin alltmer till ”hard science”. På senare tid har dock ”happiness economics” fått en synlig renässans. Forskning visar att dagens generationer är rikare än förfädernas – men mestadels inte lyckligare. Richard Easterlin – idag något omstridd p g a hans metodval – observerade detta redan för 30 år sedan. Milton Friedman förknippade välmående med ”a life of freedom”. Nobelpristagare Edmund Phelps gav sin syn på välbefinnade vid nobelföreläsningen 2007 med följande ord: ”A good economy must support the development of the individual … – good life is to discover the talents.” I dessa dagar exempelvis – och framöver – förknippar säkerligen allt fler människor på detta jordklot “happiness”med en bättre miljo för sig själva, barn och barnbarn (se exempelvis papers av Heinz Welsch, universitet i Oldenburg).

Numera publiceras allt fler ”papers” i ämnet i prestigetidskrifter och böcker – med nobelpristagaren Daniel Kahneman (Princeton), Bruno Frey (Zürich) och Richard Layard (LSE) i spetsen.  Även den Interamerikanska Utvecklingsbanken (IBRD) har börjat intressera sig för ämnet.

Layard till exempel är mycket kritisk till ekonomernas moderna budord: Ökad produktivitet och rörlighet på arbetsmarknaden. Han menar att dessa moderna krav innebär bl a hälsorisker, fler sjukdomar och därmed också välfärdsförluster.

För makroekonomer är BNP den mest kända och använda indikatorn. Detta är naturligt, eftersom (nästan) all produktion av varor och tjänster under en viss period sammanfattas i bruttonationalprodukten. En hel del BNP-ingredienser bidrar dock föga till ökat välmående. Samtidigt räknas inte faktorer med positiva välmåendeeffekter in i BNP. Hit hör exempelvis hälsa, familj, goda vänner, fritid, miljö, religion, tillfredställelse på jobbet m m – faktorer som ligger utanför ekonomin och ekonomisk grundforskning.

Lycka har också relativa dimensioner. Undersökningar visar exempelvis att testpersoner hellre tjänar 50 000 USD om året om den genomsnittliga inkomsten i branschen är 25 000 USD än 100 000 USD vid en genomsnittsinkomst på 200 000 USD.

Kan kunskapsökning göra lycklig? I princip ja, vilket bland annat tyska undersökningar visar (Georg-Simon-Ohm- Hochschule, Nürnberg). På företagsnivå missas dock fortfarande många chanser i syfte att ge arbetskraft med på senare tid höjd utbildnings- och kompetensnivå erforderlig stimulans och uppbackning. Detta är slöseri med egna resurser och företagsekonomiskt rent av dumt. Att ge de anställda en känsla av lycka borde kanske vara företagsledningarnas viktigaste fundamentala uppgift. Att värna om de egna anställdas lycka på arbetsplatsen skulle kunna bli ett av de viktigaste – och billigaste! – nyårslöften på företagsnivå. På den punkten finns det otroligt mycket kvar att göra, även i Sverige.

Men hur skall lycka mätas? Ännu så länge råder ingen enighet om den bästa indikatorn. Det finns ett antal försök. Men forskningen kommer helt klart att gå vidare vad gäller “economics of happiness”. Detta är en intressant forskningsgren med involvering av psykologi – men fortfarande i sin linda.”Lyckans ekonomi” bör också vara intressant för politiker och den ekonomiska politiken. Kritiker till ”happiness economics” hävdar dock att ökad fokus på detta område kan öka politikernas populism (se till exempel Pierlugi Barotta). Det kan vara så – men jag tror att flertalet politiker redan idag vet mycket väl, var och hur populistiska insatser kan bidra till (kortsiktiga) sympativinster.

Som vi har sett, har ”lycka” och ”lyckans ekonomi” i ett historiskt perspektiv fått olika innehåll och tolkningar. Bruno Frey sammanfattar: ”The study of happiness is just beginning in economics. It opens up challenging new areas. Further progress is especially needed in these four areas: the effects of happiness on behavior, consideration of a broader set of institutions on happiness; application of more advanced approaches in cross-national research and improved measurements on happiness.”

Alan B. Krueger, mycket känd ekonom från Princeton, tillägger: “Much of what contributes to well-being happens outside markets”. Nämnas kan bland annat

-           “type of governance she/he lives under”

-          “support from friends and family”

-          “ how we are spending our time”

-          “ how we feel about health”

”Happiness economics” är ett ämne som passar väl till dessa (jul-)dagar – och tål att fördjupa sig i efter helgarna.

Sammanfattning

Centralbankerna koncentrerar sina ansträngningar fortfarande på de mer kortsiktiga frågorna såsom inledningen av vad som numera allmänt kallas ”exit strategy”, det vill säga den successiva likviditetsindragningen efter alla extremt generösa likviditetspåspädningar under finanskrisens mest akuta dagar. Diskussionen i centralbankerna och i den akademiska världen kring penningpolitiskt nytänkande verkar alltjämt gå på ettans eller tvåans växel, speciellt avseende finansiella makromodeller, tillgångspriser och finansmarknadspsykologi. Likviditets- och bankkreditfrågor samt finansiell stabilitet däremot har hamnat rätt högt upp på den analytiska prioriteringslistan.

Här hemma har i vart fall Riksbankens Karolina Ekholm öppnat banan för en diskussion kring tillgångspriser och en sammanhängande bredare analyskrans. Förhoppningsvis är detta bara början till en mer ingående analys och (svensk) debatt om penningpolitikens pejlare och fundamenta – ett forskningsområde som på senare år bedrövligt nog hållits på lågvarv här hemma, speciellt inom universitetsvärlden. Riksbanken skulle också kunna se över prognoshorisonten för inflationen. Kanske bör den förkortas till ett någorlunda överblickbart perspektiv kring 18 månader eller – eventuellt – göras mer vagt som i exempelvis EMU-länderna eller Nya Zeeland (”in the medium run”).

Betonas bör också att prissättningen på finansmarknaderna alltmer fjärmar sig från läroböckernas ”perfect market”-modeller  –  åtminstone mycket mer frekvent och under längre perioder än tidigare.  Råvarumarknader och (”carry trade”-)aktiviteter på valutamarknaden är speciellt kännetecknande för denna utveckling, som alltför mycket drivs av omotiverad flockmentalitet. En av slutsatserna bör därför vara att Riksbanken överväger att överge den egna ”ränteprognoskurvan”. Den skapar alltför ofta snarare förvirring än den initialt eftersträvade ökade transparensen. Så mycket kan hända under resans gång!

Slutsats: Det är viktigt att den efter krisen ännu mer nödvändiga penningpolitiska forskningen snarast kan ges ökad fart. Annars hotar nödvändiga penningpolitiska förbättringar eller reformer rinna ut i sanden.  Det finns ingen anledning att vänta. Det gäller att komma ihåg att centralbanker inte är reformivrare precis (vilket principiellt är bra).

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There is no doubt that monetary policy in certain countries contributed highly to the still ongoing financial crisis – an opinion that usually does not get more than weak support by the central banks themselves. Still, only a limited number of experts and commentators suggest more than slight changes in the fundamental approach and toolbox of monetary policy, partly motivated by so far not very convincing new practical alternatives. This unpreparedness for changes increases the risk that monetary policy after some time may get to “policy and analysis tools as usual”.

However, this may be a serious mistake since we now know that global markets mostly do not work and react as research, practically oriented analysis and our own experience have told us until recently. New ideas have to be tested.

There is still a far-reaching aversion against more integration of behavioral finance in financial research. Some sympathy gains are currently noted for asset price analysis – though, unfortunately, not on a broader level. Riksbank’s vice governor Karolina Ekholm belongs to the positive exceptions, by at least taking up the issue. Fortunately, the analysis of liquidity (money supply) and bank credits is gaining momentum. So is the objective of financial stability – which is good, too!

The Swedish central bank (Riksbank) , for example, writes in its latest Stability Report that the Riksbank has the Riksdag’s mandate to “promote safe and efficient payments”. Thus, maintaining and contributing to financial stability is a very important objective for the Riksbank – and for any central bank.

Consequently – which I pointed at a couple of times before – monetary policy decisions should be increasingly supported by the so far neglected analytical fields mentioned above. The perfect market hypothesis has become obsolete in many situations. Financial markets are definitely not functioning perfectly anymore – commodity markets particularly included. This phenomenon deteriorates also fundamental conditions for macroeconomic forecasting – and for forecasts that central banks need for their interest rate decisions. This fact makes, for example, the interest rate “forecast” of the Riksbank even more doubtful.

Who can still make a relatively reliable forecast on inflation and economic trends for three years in the future? Estimates on nowadays even more uncertain output gaps takes inflation-targeting central banks more and more in uncharted waters. Particularly, financial and commodity markets tend to deviate increasingly from traditional (fundamental) pricing – with impact on growth and inflation, both domestically and globally. This conclusion should be valid even if there also will be periods with less volatile and overreacting markets.

Of course, monetary policy makers should be very careful about major changes of monetary policy strategy and tools. For this reason, I plead strongly for a gradual approach for possible changes and improvements. But this is also why lagging research on new ways of analysis and tools should be started soon. And a comment to the traditional and dogmatic monetary economists and central bankers: Looking for an enlarged and improved framework for monetary policy, does not necessarily lead to clearly positive and sustainable improvements.

But it should be worth a try to find modifications or alternatives! And nobody can probably question that certain analytical improvements are desirable, such as increased focusing at the development of money supply – or call it “liquidity” for those who dislike the term “money supply”-  and (sectoral) credit growth.

However, go on reading my notes:  All these mentioned doubts and (new) arguments should not mean the end of inflation targeting by, for example, the Riksbank and the “almost inflation- targeting approach” of the ECB – because it seems to be hard to see any really equivalently replacing approach.  But I am strongly pleading for a less dogmatic approach. Global and domestic financial markets function nowadays very differently from the early days of inflation targeting in the beginning of the 1990s.

A widened analytical framework that – after necessary research – may or should include financial instruments, macrofinancial aggregates like liquidity (money supply), credit volumes, asset prices, etc. –  if central banks really want to draw the necessary conclusions from the mistakes and shortcomings in the first part of this decade!

It is important to repeat that asset-price watching does not have the objective to get thinkable bubbles burst by a number of interest rate hikes (which central banker often use as an argument against “asset-price targeting”).  This would be the wrong understanding of what should be done. Considering asset prices (real estate) should imply that liquidity (money supply) and credit growth should be given a more prominent role in central banks’ analysis. It should be regarded as a matter of prevention – not as an intervention at a very critical stage of expansion.

Still, too much financial stability research by the central banks is concentrating on current issues and too little – at least officially – on future risks. Looking once more at the Riksbank’s Stability Report 2009/II, one can recognize that the applied financial stress indices are so-called coincident indicators, just reflecting the current situation. Sure, some future risks are discussed as well in this report – but not very illuminating when it comes to the future of two very important Swedish financial topics, the hot housing market and the depressed Baltic economies.

As far as the housing sector is concerned, at least the warning about future interest rates “getting much higher than the current low level” is taken up. However, too little is said about the implications of this challenge. I am also missing a deeper discussion of the complexity of the current deficits in the Baltic states concerning long-term improvements of exports, and, the problem of increased imports once the domestic economy will be recovering. In other words:  Central banks should look more at international and global trends for domestic financial stability reasons and elaborate more on the conclusions of this special analysis. Not each analytical improvement needs new methods – it’s also a matter of choosing appropriate topics for communication.

Obviously, the so-called Lucas critique – named after Nobel Prize winner Rober t Lucas – is still alive, saying that it’s naïve to think that aggregated historical data can give all necessary input to policy forecasting models. Dogmatic opponents of Lucas should have second or third thoughts about this issue.

Experienced and/or skilled monetary policy economists know that there have been structural changes in the past that led to new conditions for monetary policy. (Most) monetary policy makers should become more open for general policy discussions – even if they do not share the views of many discussants.

Economic research has its own cycles!

Sammanfattning

Den alltjämt inte undanröjda globala finansiella och ekonomiska krisen kan i hög grad hänföras till bankernas bristande förståelse för finansmarknadernas psykologi (”behavioral finance”). Men även idag ger bankerna prov på bristfällig psykologisk förståelse: gentemot politikerna, kunder, den breda allmänheten och även pressen. Som speciellt olämpligt ter sig många bankers något för kaxiga attityd mot den politiska sfären – ett fenomen som också Tysklands förbundskansler Angela Merkel nyligen irriterat hänvisade till. Betydelsen av en positiv samverkan med regering och myndigheter underskattas av många bankledare.

Alltför många bankledare verkar ha glömt att deras institut under finanskrisen tappat ranknings- eller bonuspoäng över hela fältet. Därför vore det psykologiskt ytterst oklokt att under de närmaste månaderna provocera allmänheten, kunder och politikerna med debattväckande bonusar och utdelningar. Bankerna bör inte laborera med trotsreaktioner utan istället i förstärkt grad fokusera på det avgörande målet – ständiga förbättringar i förtroendemätningar för att övervinna det rådande konfidensgapet.

Det vore vettigt av bankerna att snarast anställa minst två experter med ekonomisk-psykologisk inriktning: en med psykologisk förståelse för inhemska, mer traditionella marknader/reaktioner och en med psykologisk applikationsförmåga avseende de alltmer komplexa internationella/globala finansmarknaderna. Den senare skulle också kunna ge viktig input till mer brett analyserande ekonomiska sekretariat.

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How mobile is talent?

The current financial and economic crisis can partly be explained by deficits in understanding psychology of financial markets (in academic terms: behavioral finance). Reactions by financial leaders during the financial crisis do not give major evidence for a fundamental and very necessary improvement. Financial institutions (banks) get understandable low rankings in customer surveys. Politicians get tired of continued – sometimes very high – bonus announcements. Nobody should be surprised if politicians at some point will react even more restrictive against these provocations.

One of these simplifying defense arguments for bonuses has recently been used in public by the CEO of a British bank, saying that bonuses were necessary because “talent is highly mobile”. In my understanding, there is no scientific evidence whatsoever that high bonus payments per se have an positive impact an employment stability of investment banks or bank divisions with that commercial orientation. According to my analysis and experience, mobility in this special field of the labor market is mainly a function of activity volumes on security markets, M & As, etc. In good times, mobility tends to be high anyway because demand for (somewhat) experienced people in investment banking is high. Changing the employer during good times is regarded as an effective tool to push up wages and bonuses.

By the way, we are very short of neutral and good research on banks in Sweden, since a major part of financial research funds is coming from the financial industry. And which research institute wants to be confronted with hostile reactions from its main funder? For this reason, governments – including the Swedish – should give more money to completely independent financial research.

Combating the government – not a good way to go forward

There is no doubt that the political sphere and regulators in many countries will have an increasing influence on the financial sector – despite the ongoing belief of many financial leaders in perfect financial markets and self regulation. In Sweden, the whole banking lobby is fighting strongly against the possibility that Swedish financial institutions might face somewhat harder regulations in the future than competing banks in most other countries. This argument may be partly motivated – but is certainly characterized by ambiguity, too.

Serious mistakes have been committed by Swedish bank leaders as well. Two banks had an aggressive and destroying lending policy in the three Baltic countries during a longer period of time. Another bank concentrated on an offensive lending strategy in this region much later – but such an unwise shift happened anyway. And a forth Swedish major bank – for them fortunately – missed its entry into the Baltic market to a high extent by its reluctance in the early days of these three newly established countries. Thus, all four major Swedish commercial banks should have reason to be humble and co-operative.

Who can rule out that a new asset bubble will show up in the foreseeable future? Warning signals still can be received from real estate markets in Asia and, for example, from Sweden – but also from valuations on a number of important stock markets, New York and some emerging countries included. Banks looking for conflicts with political leaders act psychologically and strategically unwise. During the Swedish financial crisis in the early 1990s, there was a good spirit of co-operation between the banks and responsible politicians. I am missing this positive attitude during the current crisis which must be interpreted as a serious psychological misunderstanding. It may be worthwhile to have some second thoughts about this issue also when it come more long-term perspectives.

How keen may a government be on supporting suffering banks if/when the next financial crisis occurs? What will the banks during a thinkable future financial crisis answer to the ruling government about the fact that the banking lobby – certain officials included – in 2009/2010 was hindering necessary regulations? Is there really a chance to get to common international regulation standards?

German chancellor Angela Merkel has already directly accused German bank executives of becoming complacent again. Swedish minister of finance Anders Borg seems to dislike some major banks’ behavior as well – without using similar tough words compared to Merkel. Merkel even added that banks should understand that the government does not automatically guarantee a similar active rescue treatment of the banks when the next crisis occurs. Apart from these recent stories, I remember very well when I – in the early 1990s – had the opportunity to visit Congress and listen to the then U.S. House Banking Committee Chairman Henry Gonzalez. In the aftermath of the Savings&Loans crisis, Gonzalez did not have many friendly words to say about financial institutions.

Executive financial public power should not be challenged too much by a banking sector that one year ago was on the verge of a disaster.

Psychologically neglected areas

Consequently, the following five core contact areas of the banks/ other financial institutions are currently neglected or treated in an unwise way- to a high extent related to insufficient psychological considerations: politicians, the general public, customers (as a particularly important subgroup), the press and certain organizations (unions, credit-crunch suffering enterprises and their lobbyists). It is hard to understand why many – or even most – banks’ headquarters do not everything to improve their current poor image. Increasing efforts in this important respect would also be a good way of supporting many good and competent bank employees at the branches who most frequently – and “innocently” – have to meet angry customers.

One may ask why so many bank leaders still have these irritating and many times even arrogant attitudes. Do they still think that they are as powerful as five years ago? Or aren’t they aware of the importance of applying appropriate psychological standards? Or are they still not enough skilled to deal with the changing economic environment and fundamentals of global economics and macrofinancial trends – as, for example, in Sweden some years ago when important bank leaders did not understand the risks of the rapidly accelerating current account deficits in the Baltic countries!

Without directly relating to Swedish banks, it is a matter of fact that wages, bonuses and prestige usually correlate with a bank’s size – which does not make sense. How short can memories be? During the days of the financial crisis in the early 1990s, a number of Swedish banks very clearly communicating to the general public that the main organizational and commercial focus in the future should be put on local branches, meaning a marked decentralization of their activities. This appropriate strategy was maintained for about a decade – and in recent years gradually reversed into more central power and centralized commercial activities. Herd mentality on global financial markets turned plans again in the opposite direction.

Are banks now changing strategy again? Certain indications point at such a direction. But how long time would this last this time? In other words: When will psychological expansion hunger become visible again? By the way, this topic should also be closely watched by central banks (supervision).

Maybe we should in the future rather use the term “too big to succeed” than “too big to fail” – and consequently relate regulations to the size of a financial institution. This may serve two objectives: both avoiding moral hazard and maintaining the extremely important role of a well-working financial sector in the market economy – the system that still is superior to all other economic systems, at least in general terms.

Other shortcomings

Regulations, improved supervision, better early warning signals, a more financial stability oriented monetary policy, better working rating agencies, application of behavioral finance in important analysis, etc., cannot do everything to bring the financial sector on a safer track in the future. Ways should also be found to improve psychological, macroeconomic and macrofinancial skills of financial leaders.

There may exist psychological impediments to take up this issue by responsible or appropriate institutions. However, there is no reason to avoid this sensitive topic in the aftermath of the financial crisis. Sure, it will be difficult to develop methods to increase leaders’ competence in these two particular economic areas. Contributions to improvements could come from the theory of incentives.

Conclusions

Summarizing my conclusions of this article, I would like to suggest five ideas to be considered carefully by the banks:

• First. Co-operation – and no fights – with politicians and authorities.
• Second. Application of psychology in all external relations, the press included (and, of course, in internal matters).
• Third. The creation of some jobs for bank psychologists: on one hand as advisors to the highest decision makers for considering all thinkable external reactions before having launched new products, rules, positions and strategies – and on the other hand a bank psychologist who serves the lower and middle management (where many new ideas are born – but only for advising, not for controlling!). Economic research departments could have psychological expertise, too, in order to improve knowledge on risk considerations on financial markets and, consequently, on many customers’ and groups’ behavior.
• Forth. Better incentives and psychological encouragement should be developed for the banks’ staff.
• Fifth. Too much of the current debate on the financial crisis is addressing improved institutions and regulation in the traditional way. More attention should be paid to psychology behind the banks and all the other institutions.

A final reminder: We can read on a daily basis that financial markets to a high extent are influenced by psychology. For this reason, it cannot be logical that psychology on such a limited scale is part of positioning and decision-making by the players on financial markets – and even research!

Summary

On July 21 in 2005, China officially declared its transition from a dollar-fixed exchange rate policy to a floating regime. For a couple of years, the Chinese renminbi (RMB) actually appreciated (strengthened) – though much more slowly than American interests were pleading for.

However, during the still ongoing global economic crisis, China more or less returned to a stable exchange rate policy vis-à-vis the U.S.currency – which happened in times when trade disequilibria had reached risky or even dangerous dimensions between the two countries, and, consequently for the rest of the world.

Furthermore, the euro at present certainly is undervalued against the RMB. Today, China’s exchange rate policy also has a negative impact on other Asian currencies like the Taiwan/Singapore dollar and the Korean won. Now, time has come for China to reconsider its exchange rate policy and to again go for a gradual appreciation policy. The attempts to stabilize the global economy urges for a Chinese participation, too – particularly since China visibly has been improving its global political influence during the global financial crisis. This should also imply an increased global economic responsibility.

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Det ter sig alldeles uppenbart att den kinesiska valutan idag framstår som klart undervärderad. Det framgår av den alltjämt kraftigt växande valutareserven, vilken numera uppgår till ett värde av enorma 2300 miljarder USD. Denna anhopning av globala pengar innebär inte enbart en stigande risk för den amerikanska underskottsfinansieringen – men också för den inhemska kinesiska ekonomin med onödigt uppblåst penningmängdsökning och ihållande risk för obehagligt stigande tillgångspriser (både avseende aktier och fastigheter/lägenheter). Den alltför svaga kinesiska valutan dämpar också den kinesiska industrins omvandlingstryck, vilket kan vara negativt för Kina i ett längre perspektiv. Att via en undervärderad valuta hålla exportföretagen under armarna kan inte vara mer än en kortsiktigt verkande medicin.

Vid övergången till den rörliga växelkurspolitiken för några år sedan, det officiella pressmeddelandet innehöll bland annat formuleringen att denna politikförändring skedde för att ”further strengthen the managed floating exchange rate regime based on market supply and demand”. Tyvärr saknar dock Kinas valutapolitik all marknadsekonomisk inriktning med hänsyn till utbud och efterfrågan.  Centralbanken föredrar istället att starkt intervenera på valutamarknaden för att hålla RMB-kursen nere.

Principiellt bör  valutapolitik vara en nationell angelägenhet. Varje land bör självt bestämma över sin valutapolitiska regim. Det fungerade också väl, så länge Kina var en mindre aktör på den globala banan. Numera är dock kinesisk en ekonomisk stormakt.

Därmed har Kina också fått ett konkret ansvar för den globala ekonomin och således för minskningen av den största obalansen, det vill säga den överdrivna kinesiska finansieringen av USA:s dramatiskt växande internationella skuldfinansieringsfälla.

As most readers of my blog probably suspected, I cannot completely refrain from making some further comments apart from those I already made to the press. Elinor Ostrom’s research on the positive management of common property by user associations may, for example, be helpful when dealing with environmental issues on a local or regional level. Williamson’s organizational and institutional research contributes, for example, to a better understanding why firms many times may prefer vertical integration.

¤ Both this year’s winners of the Nobel Prize in Economics and their research areas (organizing/organization) were strongly recommended in my latest blog. This is nice again because I was forecasting at least one name correctly seven times out of ten in the past decade (but I should be humble). This claimed quite some reading concerning research results that were achieved some 20-30 years ago and that are still relevant for current research and studies. Doing this kind of studies is not only fun but it improves also my own conditions for studies and teaching.

¤ I am happy with the professors Elinor Ostrom(Indiana) and Oliver Williamson(Berkeley) who will receive the highest economic award in Stockholm on December 10. But I feel somewhat sorry about Jean Tirole (Toulouse) – one of the leading European economists below 65 years – since Tirole to a high extent deals with organizational issues as well (though mainly from other angles). However, Tirole’s time still may come.

¤ I also feel happy about the fact that interdisciplinary research (by sociologist Elinor Ostrom) gets more appreciation which I have been pleading for during quite some years. Our economic world has become by far too complex that we can afford to neglect other research disciplines that have an impact on the economy such as psychology, sociology, politics, law and regulations, health and the environment. The ideal world of the classical “homo oeconomicus” does not exist anymore (even if Milton Friedman once wrote that the results of modeling not necessarily have to be in line with reality).

¤ After many years of pointing at the absence of women in the list of Nobel Prize winners and at the fact that only a few women had major scientific breakthroughs some twenty years ago, I notice with satisfaction that Elinor Ostrom since several years ago was on my list of thinkable female Nobel Prize winners (and Oliver Williamson, by the way, from the very beginning of that list).

¤ Looking at interesting areas for next year’s selection, research on labor markets, modern growth theory, finance and modeling techniques could become particularly relevant. This year, my wish of awarding a dignified woman became verified. For 2010, I am particularly hoping for a European Nobel Prize winner. European economic research is catching up.

I will get back to all these Nobel Prize issues in the beginning of October 2010.

Speech at the Eastern European “summit” Economic Forum in Krynica/Poland on September 11,  2009.

I. Lessons from history and from shortcomings in the current crisis

First of all, I would like to thank the arrangers of the Economic Forum for the invitation to this wonderful environment close to the Polish mountains. Being here and coming together with many top representatives from politics, central banks, academia and the corporate sector in Central, South Eastern and Eastern Europe makes actually the unofficial name of this conference – “the Davos meeting of Eastern Europe”- quite appropriate.

According to my own experience, decision-makers in considerable parts of the banking sector have – on average – lost professional skills in economic history in the past decade or so. Or – even worse – they did not care about economic history in times of affluence, excess liquidity (M growth) and exploding credits, exaggerated focus on quarterly profits and irresponsible bonus payments. The number of genuine bankers with broad banking knowledge seems to have decreased. It has become harder to find “real” bankers on the executive floors in Western Europe and the U.S. This could be also a hint to the many relatively new (European) market economies.

Literature has given us a great number of contributions to the importance of well-working or well-developing financial markets on macroeconomic growth – from Raymond Goldsmith in the late 1960s to Andrei Shleifer and Ross Levine more recently.

In reality, more or less the whole globe gradually became aware of what a major financial crisis can mean to the real economy. In 2008, a severe global recession became unavoidable. Such a bad development was simply not on the cards two and a half years ago when the first signs of more concrete troubles in the American financial sector became visible. Despite the fact that most of us then understood that global financial markets had become much more integrated in the past decades, there were only a few experts like Nouriel Roubini and James Hamilton who at least roughly foresaw the degree of global contagion in the real economy.

There have been enough financial crises in the past that were caused by excesses in money supply and credit growth. I still wonder why bank executives have such short memories. In Sweden, we had a severe banking crisis in the early 1990s. Only a few years later, the world was confronted with the dot.com crisis and the so-called Asian crisis which had its starting point in two countries with very high current account deficits – Thailand and Malaysia – before a broader Asian contagion was noted. And when that crisis more or less had passed by, American and Swedish financial officers “prepared” for another bubble, i. e. what was to become the subprime bubble in the U.S. on one side and the credit bubble in the Baltic states on the other side. Bounded rationality – using the great Nobel prize winner Herbert Simon’s words – must have penetrated the minds of many executives at some point as well. And the big current account deficits in parts of Asia from the latter part of the 1990s were forgotten already 10 years later when the rapidly expanding trade deficits in some European (reforming) countries started to skyrocket.

I tend to reject the opinion that economic theory and research did not give warning signals for preventing the current global financial crisis. Sure, we still do not have a comprehensive theory for global financial markets, and we still do not know how to model or calculate global multiplier effects from certain financial events or trends. However, a couple of hints – though from different angles – on a forthcoming major financial crisis could be found already around 2004/2005, for example, from

• economic history: (Charles Kindleberger, John K. Galbraith, Ben Bernanke, etc.)
• psychology: behavioral finance (Robert Shiller; herd mentality, overconfidence, etc.)
• institutional economics: (Douglass North, Oliver Williamson, etc)
• incentives (Bo Holmström, Jean Tirole, etc.)
• liquidity(M) , micro/macro (Jean Tirole, Axel Leijonhufvud, AllanMeltzer, Otmar Issing).

However, some research areas were highly underdeveloped before the financial meltdown in 2007 – and still are – such as

• modeling bounded rationality (psychology)
• behavior and skills of financial managers and investors
• links between global financial markets and global macroeconomics
• research concerning the multiplier mp of the monetary base b (M=mp x b)
• systemic financial risks
• global contagion (modeling global multiplier effects)
• links between financial products (micro) and their aggregated markets/volumes.

In order to find remedies for avoiding future bursting bubbles, one has to look at the background of the still ongoing global financial and economic crisis. Knowing more about this, may be beneficial at some future point for countries in Eastern and South Eastern Europe. The following summary does not cover every single reason for the current financial and growth disaster. But my list below should be long enough to make understand that there were many factors behind the first big global financial explosion – and which should be regularly be checked in the future.

Reasons for the ongoing global and financial crisis (without ranking):

* (X) = improvements that can be achieved by regulation – if handled carefully.

Even a quick look at this list shows that there is quite a substantial number of areas that cannot be improved by the banks themselves. Only half of about 20 areas can be left to the banks themselves to find more sophisticated solutions. However, this conclusion does not guarantee that the banks will stick to such a commitment forever or even at all. In this context, I am easily reminded of some words coined by Wall Street’s greatest guru ever – Henry Kaufman from Salomon Brothers – in the mid 1980s when he commented so briefly and sharply on financial deregulation: “Some re-regulation will be unavoidable in the future”.

II. Responsibility and regulation

When looking at the reasons for the global financial crisis as mentioned above, five institutions with major responsibility for the still ongoing financial earthquake can be found. They are – without ranking -

• central banks
• supervision
• governments
• rating agencies
• banks.

In other words, there are further institutions and groups of interest that can be partly blamed for the expanding and bursting financial bubble, with the U.S. as the causal and geographic origin. Thus, harder regulation of banks, of other financial institutions and financial products cannot do the job alone to prevent the world from financial crises or to limit future damage. There is also a great need of changing behavior and governance. But how can bad financial behavior be addressed when we still know by far too little about how to explain, measure, model and combat all those major shortcomings on financial markets?

Obviously, experts agree worldwide these days that necessary regulation on deregulated financial markets proved to be insufficient or lagging. We should also conclude that many central banks in the beginning of this decade focused too much on meeting their inflation objectives / targets at the expense of money supply and credit growth. Again, I ask myself why so many financial leaders did not listen to criticism from experts, sometimes not even when warnings were coming from their own organization. I personally remember written and verbal warnings concerning the procyclicality of the Basel II-capital requirements and the insufficiencies of rating agencies by the professors and central bank leaders Charles Goodhart (previously Bank of England) and Hans-Helmut Kotz (Deutsche Bundesbank). Claudio Borio (BIS) has been concerned about rising asset prices for a long time. Some other professors such as Robert Shiller, Raghuram Rajam and James Hamilton also sent their early warnings to the general public – though from different research angles.

Unfortunately, too few influential people listened to them. We simply had – and still have – too much herd mentality on global financial markets, analysts included. This phenomenon cannot disappear or be diminished decisively by regulation. The issue is rather a better understanding of markets – which again underscores the importance of behavioral finance, deepened global financial research and information. I warmly recommend the countries being represented here to increase research, analysis and application of behavioral finance. Besides, some psychological conditions and reactions may vary in a number of countries.

Furthermore, certain financial areas cannot work without effective regulation. This takes us to another keyword – efficacy. Regulations must function well under all circumstances, even the most dramatic ones. I usually make a distinction between

• necessary and well-working regulations
• necessary and improvable regulations
• unnecessary regulations.

Altmeister Paul Samuelson’s definition is still the one I often apply. In his textbook Economics – more recently published together with Robert Nordhaus – Samuelson writes that “regulations consist of government rules or laws issued to control the prices, sales, or production decisions of firms”…(and there is) in addition a newer form of regulation, known as social regulation”.

Certain social regulations in the aftermath of this ongoing crisis should be implemented ambitiously in order to more consequently protect bank customers – both households and corporations – but also to better protect the banks themselves and their employees. The aspects of meaningful social regulations should not be overlooked. This is why I have been pleading for a long time so strongly for improved financial literacy which would be a good idea for countries in Central and (South) Eastern Europe as well. Improved financial literacy should be achieved mainly by regulation – but also by giving financial support to voluntary organizations – directly or indirectly – by tax reductions.

Financial literacy may serve as a good example of combining regulations and private initiative.

Looking at my list of reasons for the current global financial crisis, takes us “easily” to the conclusion that most areas with regulatory problems already had their regulations before the eruption of the acute crisis – but that many of these existing regulations did not work properly and/or allowed for loopholes. In other words: Regulations must be efficient which is not always easy to recognize during their design or preparation.

What we need are not only stress tests for banks but also for regulations. This assumes, however, much better macroprudential research, better models and practical application. Even extreme scenarios should not be ruled out. Apparently, the development of the current crisis must be considered as such a very unique event.

However, some obvious major risks in this current regulation cycle should not be neglected, such as

• too strong general belief in regulation
• the risk of overregulation
• the risk of insufficiently functioning financial markets
• lagging efficiency
• overlooked future loopholes and shortcomings.

To summarize: Certain regulations are without doubt unavoidable on globalized financial markets. This assumes improved institutions. Or as Dani Rodrik puts it: “The market economy is necessarily embedded in a set of nonmarket institutions”. This means that certain public intervention sometimes must happen in a market economy for special protective measures.

III. Experience from Sweden – and important conclusions in a Central and (South)Eastern European financial market perspective

The objective of this brief presentation is not to criticize some Central and Eastern European countries for more or less severe accidents in their own financial system. Sweden has also had two major financial crises in the past two decades, one in the early 1990s and another one at the present time, at least within some major institutions that have been expanding too rapidly in the Baltic states. Thus, there is good reason to be humble.

Let me sum up some of the policy and strategic mistakes that – in my opinion – strongly contributed to the two above-mentioned Swedish financial crises.

Major policy and strategy mistakes as early contributors to two Swedish financial crises

The crisis in the early 1990s:

Central bank:

– Unilateral link of the crown to the ECU/Deutschmark

- Too high “expansion generosity” by the administration after financial deregulation

Government:

Too high budget deficit, foreign debt and deficits in the current account

The (partial) crisis in 2008 – ?

Central bank:

Focusing too much on meeting the inflation target – which easily was met – and neglecting expansion in credit growth, asset price expansion and some Swedish banks’ credit risk exposure in the Baltic states.

Supervision:

Underestimating the risks in the Baltic states.

Government:

No major policy mistakes (strong public finance, macroeconomic balance).

Macroeconomic balance makes countries more resilient to financial crises, even in mature economies. When it comes to (somewhat) less mature or emerging economies, this conclusion can particularly be related to healthy fundamentals for public finance and the balance on current account. The Swedish example gives good evidence for this conclusion.

Without good macroeconomic fundamentals, a fixed exchange rate in a less mature country usually cannot give a good protection against major financial imbalances. Domestic pressure on GDP growth can become too hard.

Of course, it would be great to welcome further new EMU members. This should, however, happen from an absolute position of strength. Again: Fixed exchange rates in an unstable or poor economic environment usually lead to bad results when major financial crises occur.

IV. Conclusions

¤ Even if the U.S. may be seen as the starting point for the eruption of the global financial and economic crisis, it should not be overlooked that many countries had made their own policy mistakes that aggravated the consequences of that global economic disaster. Professor Otmar Issing – maybe the main architect of the ECB – always said, and still does, that “stability always begins at home”. This may concern a whole nation, but also single companies and private households.

¤ Some parts of (South) Eastern Europe have been hit quite hard by the global financial crisis. Good and stable macroeconomic conditions, however, make the impact from such a negative exogenous development (somewhat) less painful and should open a more speedy road to recovery compared to imbalanced countries that have been hit hard by shrinking confidence of (long-term) foreign and also domestic investors. Good general conditions and favorable microeconomic and macroeconomic equilibria may help considerably. This is one of the reasons, why the outlook for Poland – just to mention one country – after the crisis seems to look more favorable than for quite a number of other countries in the region.

¤ It is worth mentioning that international competitiveness will be very important for exports once the European/global economy starts to recover. Countries dealing with this issue now, will have a better chance to escape from the current problems than countries which in this respect are more passive. There is an obvious risk that the gap between the more ambitious and the more static countries will have widened after the crisis. Foreign investors will see (South) Eastern countries as much more heterogeneous markets than in the past.

¤ Generally speaking, the main impediments to well-working regulations and collaborative agreements come from human behavior (psychology). The current global financial and economic crisis can to a great extent be attributed to phenomena like greed, abuse of incentives, performance pressure (“angst”), overconfidence, neglect of historical experience, etc. Without improved research / interest for behavioral finance and understanding of this exciting scientific orientation, financial regulations will be continually limited in their efficiency. The “homo oeconomicus” has disappeared from global financial markets.

¤ Another important step forward is the recognition that regulations should be completely designed for giving the right incentives to players on financial markets. “Perverse incentive structures” – as Rajan calls one of the main characteristics of the current crisis – should not exist anymore in the future regulatory framework.

¤ The financial crisis has shown that there is good reason for reconsidering monetary policy at least somewhat, i.e. when it comes to variables like liquidity, credit growth and asset prices.

Summary

It is, as usual, hard to predict the next winner of the Nobel Prize in economics. The method should be to identify certain research areas that are – or should be – on the “waiting list” and then to find some outstanding pioneers in these fields. The guess has to be done in this order. Areas that could be particularly interesting this year are modern growth theory, theory of firms, theory of incentives, labor market and finance – and as always – certain important macro- and microeconomic methodological breakthroughs. However, I would not rule out economic research topics with interdisciplinary links to sociology, psychology or politics. Most text of this article is written in Swedish – but foreign readers will be provided with headlines in English above the two specific tables with my own favorite candidates (at the end of this paper). Most candidates come again from the U.S. If the award goes to Europe, the French economist Jean Tirole (Toulouse) should be the most probable candidate. And I continue to plead for Assar Lindbeck as a very good candidate.

Den 12 oktober är det åter dags att utse årets Nobelpristagare i ekonomi – eller rättare sagt vinnaren av Riksbankens ekonomipris till Alfred Nobels minne. I år är det 41 år sedan ekonomipriset i ekonomi skapades med anledning av Riksbankens 300-åriga jubileum (första prisutdelningen år 1969). Det finns fortfarande många forskningsområden/forskare som förtjänar få ”the Prize in Economic Sciences in Memory of Alfred Nobel”.

En aktuell lista på Nobelpriskandidater omfattar kanske omkring 200-300 namn. Jag nöjer mig här med cirka 40 starka kandidater – och kan givetvis missa årets namn. I fjol blev hela ”gissningsomgången” rätt: området ”internationell handel”, namnet Paul Krugman och hans placering på min ”snäva” favoritlista. 2007 överraskades jag dock av resultatet. Inte så mycket för att jag missade att sätta Hurwicz, Maskin och Myerson på den något bredare listan – utan snarare p g a det faktum att en rätt liknande forskningsinriktning tilldelades Nobelpriset bara två år tidigare (vilket givetvis påverkade min egen selektion).

2006 gick det emellertid bättre, när jag placerade Edmund Phelps bland de främsta kandidaterna. 2005 däremot var jag något tveksam till att spelteorin skulle belönas, även om det i alla fall fanns Thomas Schelling på min utvidgade lista. 2004 gissade jag också rätt med Edward Prescott – men trodde ej på statistikerna Engle/Granger året innan (endast tre år efter statistikerna Heckman/Mc Fadden). Åren 2002 och 2001 hamnade jag också delvis rätt med psykologen Daniel Kahneman och George Akerlof.

Faktum är att hittillsvarande 62 Nobelpristagare haft en genomsnittsålder på nära 70 år och att endast ett fåtal ekonomer varit under 60 år vid utnämningen (exempelvis Samuelson, Heckman, Lucas, Merton, Maskin, Myerson och förra året Krugman). En del Nobelpristagare fick till och med vänta till cirka 80 års ålder och längre, innan de fick den ekonomiska vetenskapens högsta utmärkelse (Coase, Ohlin, Schelling och 2007 den i juni i fjol bortgångne Leonid Hurwicz med så mycket som 90 år). Historiens hittills yngste Nobelpristagare hittills blev Robert Merton, som vid Nobelpristilldelningen 1997 inte hunnit bli mer än 53 år.

Intressanta forskningsområden med praktiska tillämpningsmöjligheter avser bland annat incitamentsteori, kontraktsteori, auktionsmodeller, ”theory of firms”, juridikens effekter på ekonomin, hälsoekonomi, modern tillväxtteori, arbetsmarknad, finansiell ekonomi – fjolårets vinnarområde ”internationell handel” med hänsyn till globaliseringens nya (finansiella) spelregler givetvis icke att förglömma.

Inom makroekonomin torde den moderna tillväxtteorin, arbetsmarknaden och vissa konjunkturella appliceringsmodeller räknas till de mest relevanta forskningsområdena för innevarande års utnämningsprocess.

För egen del är ser jag en rad mikroekonomiska forskningsgrenar som borde ligga speciellt bra till i år, till exempel ”theory of firms” inklusive ”theory of incentives”, ”auction theory” och vissa institutionsekonomiska inslag (”law and economics”). Jag är också en anhängare av interdisciplinär ekonomisk forskning, vilken kan omfatta bland annat politik, sociologi, psykologi, juridik (”law and economics”) och miljö. ”Behavioral economics” med sina psykologiska inslag kan framöver åter komma att belönas. Kanske behövs dock fler vetenskapliga genombrott inom detta område. Ekonomi och sociologi/politik passar bra ihop i många sammanhang – med många viktiga praktiska tillämpningsområden såsom kontaktbildande och entreprenörskap. Många mikroekonomiska/institutionella forskningsresultat har också bäring i den otillräckligt uppmärksammade u-land/”emerging market”-forskningen. Den renodlade ekonomiska miljöforskningen avancerar – men torde ännu icke vara mogen för ett Nobelpris. Vissa vägledande teoretiska arbeten med koppling till miljöekonomi har dock redan gjorts, till exempel av Romer och Tirole (vilket förr eller senare ytterligare kommer att förstärka deras kort). Det kommer också framöver att finnas Nobelpristagare med rent teoretisk inriktning såsom dynamisk modellforskning, nya jämviktsmodeller, nya statistiska/ekonometriska metodförbättringar/upptäckter m m.

”Normalt” går Nobelpriset i ekonomi till USA, speciellt på senare år. Hittills har mer än två tredjedelar av Nobelpristagarna i ekonomi forskat på andra sidan Atlanten. Sedan 1990-talet har endast tre Nobelpristagare i ekonomi varit verksamma vid europeiska universitet; totalt är det cirka ett dussintal européer utav sammantaget 62 Nobelpristagare. Ingen forskare med verksamhet i Asien (exklusive Israel), Afrika och Latinamerika har hittills lyckats få ekonomins ”OS-guld”. Men kandidater av indiskt ursprung finns även i årets lista. Japan tas sällan upp i kandidatdiskussionen – trots att japanska ekonomer försett världen med en hel del viktiga ekonomiska forskningsresultat (M. Aoki, H. Uzawa, K. Hamada, K. Matsuyama, H.Tsurumi). (Nästan) hela Latinamerika hoppas fortfarande på Hernando de Soto (fattigdom, äganderätt). Han anses dock ofta att vara för långt borta från Nobelpristagarnas vanliga teori- och modellvärld.

Tre amerikanska universitet (Chicago, Harvard och Berkeley) uppnår cirka en tredjedel av hittillsvarande Nobelpristagare (det vill säga sedan första prisutdelningsåret 1969). Även Princeton och Stanford står för åtskilliga Nobelpristagare.

Denna konstellation är säkerligen till stor del ett resultat av den stora anhopningen av elitforskare på andra sidan Atlanten. Även flertalet av Sveriges internationellt mest kända aktiva nationalekonomer – exempelvis Assar Lindbeck, Torsten Persson, Lars Svensson, Jörgen Weibull och Per Krusell – har influerats av den amerikanska forskningsmiljön. Det ibland nämnda argumentet att Assar Lindbeck inte skulle passa som Nobelpristagare p g a hans affinitet till Nobelprissfären håller jag helt enkelt för felaktigt. Lindbecks forskning – särskilt tillsammans med Dennis Snower – har varit banbrytande. Just under den pågående globala krisen ser man åter det stora problemet med de av Lindbeck/ Snower undersökta ”insider”- och ”outsider”-konstellationerna på arbetsmarknaden.

Det bör också hänvisas till två ytterst underrepresenterade inslag i Nobelprissammanhang. Kvinnliga ekonomer har hittills överhuvudtaget inte funnits bland pristagarna. Det har delvis sin logiska förklaring, eftersom andelen kvinnliga ekonomer på toppnivå alltjämt är alldeles för begränsad. Men det finns dess bättre allt fler yngre kvinnliga forskare med goda framtidsutsikter. På kort sikt skönjes emellertid inte många kvinnliga nobelpriskandidater. Internationellt uppskattade kvinnliga forskare är exempelvis Elinor Ostrom (mestadels som statsvetare), Anne Krueger, nuvarande presidentrådgivaren Christina Romer, Susan Athey, Carmen Reinhart, Ester Duflo, Janice Eberly, Janet Currie, Catherine Kling och Monika Schnitzer. Det saknas dock tyvärr i stort sett kvinnor med banbrytande resultat på den mer teoretiska ekonomifronten som åstadkommits för två till tre årtionden sedan. Något som på sikt dess bättre kommer att förändras. Susan Athey (Harvard) till exempel verkar kunna bli en stor stjärna. Antalet yngre stora kvinnliga ekonomtalanger växer ständigt. I motsats till naturvetenskapliga forskningsresultat behöver ekonomiska forskningsrön med Nobelpriskvalitet en minst 20-årig ”utvärderingsperiod”.

Vidare bör inte bortses ifrån att ekonomer med forskning i Europa hamnat rejält på efterkälken i Nobelprissammanhang. Fransmannen Jean Tirole till exempel borde dock redan idag vara en mycket het Nobelpriskandidat – trots hans relativt unga ålder – och hans mer seniora landsman Edmond Malinvaud borde ha varit det i flera årtionden. Richard Blundell, Martin Hellwig, Peter Nijkamp, Christopher Pissarides, Guido Tabellini och Alberto Alesina samt nuvarande IMF-chefekonomen Olivier Blanchard är andra välkända europeiska namn med (viss) verksamhet på denna sida Atlanten.

Skulle livslång framgångsrik forskning belönas – vilket inte hänt på senare tid – torde nog Martin Feldstein ligga speciellt bra till.

Sammanfattningsvis: Mycket talar för att en banbrytande forskningsinsats för cirka två à tre årtionden sedan kommer att prisbelönas även denna gång. Nobelpriskommittén vill uppenbarligen undvika belöning av relativt unga forskningsresultat, hur intressanta de än må vara. Man vill inte någon gång i framtiden tvingas erkänna att idag trovärdiga resultat inte håller i det långa loppet. Relativt ung – men framgångsrik – forskning har således små chanser att ta sig fram redan nu; i detta sammanhang kan nämnas exempelvis Ross Levines finansiellt orienterade tillväxtforskning och David Cutlers, Jonathan Grubers samt Kevin Murphys insatser inom ”health economics” (utan att glömma Angus Deaton i det hälsoekonomiska sammanhanget). Även Daron Acemoglus utvecklings- och tillväxtforskning och Alan Kruegers arbetsmarknadsstudier är redan av världsklass – men av ”för ungt” datum. ”Behavioral finance/economics”-forskarna Robert Shiller, Richard Thaler, Douglas Bernheim och även Bruno Frey och Ariel Rubinstein befinner sig nog i gränslandet till relevant ”tidsmässig verifikation” (även relaterat till den tidigare pristagaren Kahnemans forskning). Uppenbart är också att matematiseringen av den ekonomiska forskningen medfört en från Nobelpriskommitténs sida allt starkare fokusering på kvantitativa metoder jämfört med de mer allmänna, kvalitativa beskrivningarna av viktiga forskningsrön.

Om några dagar får vi veta, vilken/vilka pristagare nobelpriskommittén med sin ordförande professor Bertil Holmlund (Uppsala) har utsett.

Blir det denna gång en pristagare med hemvist inom mikroekonomin efter fjolårets makroekonomiska ”seger”? Cirka en tredjedel av alla hittillsvarande Nobelpriser har gått till makroekonomin, med en mer påtaglig anhopning under 1970- och 1980-talen.

Miljöekonomins makroekonomiska aspekter är kanske på väg att få relevans även i Nobelprissammanhang – men i så fall tills vidare mer indirekt, även om William Nordhaus (Yale) och Theodore Groves (UCSD) inte behöver vara helt chanslösa. Den allt viktigare hälsoekonomin (”health economics”) har troligen också fortfarande en ganska påtaglig utvecklingsbana framför sig precis som modern informationsekonomi (”information economics”) – trots en kapacitet som Berkeley’s Hal Varian – och den alltjämt eftersläpande forskningen kring globala finansmarknader likaså, åtminstone om man följer priskommitténs traditionella mönster.

Avseende den alltmer inflytelserika mikroekonomin förefaller områdena företagsorganisation (inklusive incitament) och kontrakt samt auktioner bli alltmer intressanta inslag liksom nya ekonometriska metoder (även på makrosidan). Det vore definitivt ingen större överraskning om årets Nobelpris återigen gick till en mikroekonom, kanske med inriktningen ”theory of firms”.

Kanske är det dags att ånyo ge forskningsområdet ”finance” tilldelning av Nobelpriset, vilket dock inte kan betecknas som en av Nobelpriskommittén försummad forskningsgren. Den senaste prisutdelningen till en ”finance”-forskare ligger emellertid 12 år tillbaka i tiden. Det bör i detta sammanhang tilläggas att den rådande globala finanskrisen knappast kan skyllas på bristande forskning inom ”finance” och generell finansmarknad (se många intressanta arbeten av exempelvis Kindleberger, Eichengreen, Bordo, D.Diamond, Allen, Tirole och även Bernanke själv). Detta kan sägas trots att ekonometriska modeller hittills inte lyckats fånga in multiplikatoreffekter på den globala finansmarknaden. Finanskrisen bör således ingalunda innebära något hinder för ett ge Nobelpriset till en ekonom med ”finance” eller ”financial markets” som specialitet.

Interdisciplinär forskning – det vill säga kombinationen av ekonomi med bl a politik, sociologi och psykologi – har också fått en hel del uppmärksamhet under årens lopp och tilldelats omkring en femtedel av Nobelpriserna så här långt. Det kan så småningom också vara dags för den intressanta delgrenen ”law and economics”.

Ekonometri inte att förglömma. Här finns många viktiga, ännu obelönade insatser insatser (L.P. Hansen, J. Hausman, S. Johansen, P. Phillips, T. Sargent), vilka jag emellertid inte vill fördjupa mig i. Den USA-födde Chicago-ekonometrikern Lars Peter Hansen står kanske längst fram i den väntande kön av statistiker/ekonometriker.

My own – subjective – list of about 20 top candidates:

Min egen lista på cirka 20 toppkandidater, vilken per definition utgör en subjektiv värdering av prestation, aktualitet och personligen favoriserat forskningsområde, toppas i år – sorterad efter område utan speciell rangordning – av:

• Macroeconomics – makroekonomi (allmänt, modeller och dylikt): Robert Barro (Harvard), Paul Romer (Stanford), Kenneth Rogoff (Harvard), Christopher Sims (Princeton), Thomas Sargent (New York University)
• Microeconomics - mikroekonomi (kontrakts- och auktionsteori, ”theory of firms”, ”theory of incentives, institutionell ekonomi): Jean Tirole (Toulouse), Bengt Holmström (MIT), Peter Diamond (MIT), Avinash Dixit (Princeton), Paul Milgrom (Stanford), David Kreps (Stanford), Oliver Williamson (Berkeley), Oliver Hart (Harvard), Michael Jensen (Harvard, även ”finance”)
• Finance:
  Stephen Ross (MIT) och Richard Roll (UCLA);
  Eugene Fama (Chicago) och Kenneth French (Dartmouth)
• Interdisciplinary research:ekonomi / sociologi:
  Steve Granovetter (Stanford);ekonomi / politik: Elinor Ostrom (Indiana)
  Ekonomi/psykologi: Robert Shiller (Yale)

Som synes, har jag denna gång en längre lista på mikro- än på makroekonomer. Självklart kan även ett annat namn från nedanstående – något större – lista bli vinnare av årets Nobelpris i ekonomi; plus kanske ytterligare 150-250 personer som inte finns på vår kandidatlista. Nobelpriset i ekonomi har med andra ord fortfarande många namn och forskningsområden att belöna.

Några äldre ekonomer är fortfarande teoretiskt tänkbara Nobelpristagare trots gradvis minskad sannolikhet – med kanske William Baumol, János Kornai, Edmond Malinvaud, Nathan Rosenberg, Martin Shubik och Gordon Tullock i spetsen. Även konsumtionsteoretikern James Duesenberry har nog hoppats på nobelpriset sedan 1969.

Sammanfattningsvis: Av totalt 200-300 tänkbara Nobelpriskandidater försöker vi i denna analys varje år ta fram 35-40 speciellt starka namn (se tabellen på nästa sida). Endast ett fåtal av dessa kandidater är huvudsakligen verksamma utanför USA (det vill säga i Europa). Rent matematiskt är sannolikheten att vi hamnar rätt med årets ”namnprognos” kring 15-20 %. Egna analyser har visat att inte ens antalet artiklar i de främsta ekonomiska tidskrifterna behöver ge rätt fingervisning. Dels ligger en del tidigare Nobelpristagare ganska långt nere på den typen av rankning. Dels finns det väldigt många statistiker/ekonometriker bland de främst placerade artikelskribenterna, eftersom deras pionjärinsatser ofta styr modellval och dylikt i många vetenskapliga, mer banbrytande artiklar/papers. Denna forskningsinriktning halkar dock inte efter i ett 10-års prisutdelningsperspektiv.

Som nya namn på denna ganska begränsade lista finns det i år fyra professorer:

Christopher Pissaridis (LSE)

William Nordhaus (för andra gången, Yale)

Ariel Rubinstein (New York University)

Robert Shiller (Yale)

My own ”top 40”-list for 2009 :

*Kandidater som kanske denna gång förtjänar speciell uppmärksamhet. Kursivt skrivna namn är nya på listan.