Historical Monetary and Financial Statistics for Sweden, Vol 2

Historical Monetary and Financial Statistics for Sweden, vol 2

- Published by the Riksbanken and Ekerlids

9 contributors: Sölvi Blöndal, Jan Bohlin, Rodney Edvinsson, Klas Fregert, Roger Gustafsson, Tor Jacobson, Johan Söderberg, Daniel Waldenström, Anders Ögren.

Editors: Rodney Edvinsson, Stockholms University Tor Jacobson, Riksbanken Daniel Waldenström, Uppsala University The project Historical Monetary and Financial Statistics for Sweden

 The project started in 2006.  Inspiration from Historical Monetary Statistics for Norway  Why the Riksbank? 1) Scientific task to reconstruct historical data. 2) Continuity 3) Deeper knowledge of its own history 4) History offers better predictions  For different users and analytical purposes.  A database was launched in 2008.  first volume was published in 2010, focus on exchange rates, prices and wages.  The books are written in English, to reach international audience.

Historical Monetary and Financial Statistics for Sweden. Vol 1 (2010)

 1. Introduction  6. Foreign exchange rates  2. Swedish monetary 1804–1914 standards in a historical  7. The Swedish krona, perspective 1913–2008  3. Swedish Payment  8. Swedish consumer Systems 995–1534 prices 1290–2008  4. The multiple currencies  9. Wages of unskilled of Sweden-Finland 1534– labourers, 1365-1864 1803  10. Wages of  5. Foreign exchange rates manufacturing workers, 1658–1803 1860–2007

Vol. 2 consists of eight chapters

 1. Introduction  5. Fiscal statistics for  2. A price index for Sweden 1670–2011 residential property in  6. Swedish stock and Göteborg, 1875–2010 bond returns, 1856–2012  3. A price index for  7. Swedish Money residential property in Supply 1620–2012 Stockholm, 1875–2012  8. The Riksbank balance  4. The Gross Domestic sheet, 1668–2011 Product of Sweden within present borders 1620– 2012

New price index of residential property back to 1875

 Two cities: Stockholm and Gothenburg.  Based on primary material 1875-1957  14,000 observations in Stockholm  7,000 observations in Gothenburg

Problem of historical comparisons:  Different types of properties. Apartments for renting and houses.  Rent regulations from 1940s. Market price different for apartment buildlings depending on ownership  Holding quality constant over time.

Hötorget 1880s. Large parts of today’s inner city countryside before Upturn in real property prices 1995-2010 unprecedented historically

200 180 160 Growth, per cent 140 120 100 80 60 40 20 0 1875-1905 1918-1931 1955-1979 1985-1990 1995-2010 Previous ”long” upturns were followed by declines (in real prices)

50 Decline, per cent 40

0 1905-1918 1931-1955 1979-1985 1990-1995 2010-2012 Property prices Stockholm/Gothenburg (apartments up to 1957, houses after 1957) deflated by different nominal series

800

400

200

100

25 1875 1900 1925 1950 1975 2000

Deflated by GDP/capita Deflated by cost-of building index Deflated by cost of building per square metre Deflated by CPI Historical national accounts for Sweden, back to 1620

 Swedish historical national accounts, among the most detailed in the world  Still ongoing project  Main revisions: 1) agriculture fluctuations 2) inclusion of home industries 3) better series of real estate  Extension back to 1620

Primary material unique internationally, not used previously Trend per capita GDP growth (HP-filter with λ=1000)

-1 1600 1650 1700 1750 1800 1850 1900 1950 2000

-2 Swedish GDP per capita relative to its trend (HP-filter, λ=100) Sharpest declines in GDP since 1850

10 9 Decline in GDP 8 7 6 5 4 3 2 1 0 1940 1921 1917 1918 2009 1867 1931 1941 1932 1851 1993 1977 Government debt

 Reconstructing the historical evidence on central government debt, state expenditures and revenues.  Wars were a notable factor for public indebtedness, also Second World War.  Dramatic debt spikes in the 1970s, 1980s and 1990s  1990s, all-time high of 94 per cent of GDP

The worst fiscal crises in Sweden (increase debt/GDP

50 Increase in debt/GDP

0 1718-1724 1782-1792 1937-1945 1976-1985 1990-1996 Government debt as a share of nominal GDP, per cent Central government expenditures and revenues as shares of GDP Stock returns and interest rates

 Stock returns and interest rates in the Swedish economy from the 19th century until present day  Market interest rate data collected for both long- term and short-term horizons

Large institutional changes:  The Stockholm Stock Exchange 1901, reorganised  Few companies listed initially, banks 1907  Stagnant after the Kreuger crash  Deregulations 1980s and 1990s.

Stock, bill and bond returns indices, real values, 1901–2012

1000.00

100.00

Stock price index Stock return index 10.00 Yield on short-run bill Yield on long-run bond

1.00 1901-10 1904-11 1907-12 1911-01 1914-02 1917-03 1920-04 1923-05 1926-06 1929-07 1932-08 1935-09 1938-10 1941-11 1944-12 1948-01 1951-02 1954-03 1957-04 1960-05 1963-06 1966-07 1969-08 1972-09 1975-10 1978-11 1981-12 1985-01 1988-02 1991-03 1994-04 1997-05 2000-06 2003-07 2006-08 2009-09 2012-10

0.10 Real Stock Return Index, crashes (more than 25 per cent decline)

60 Decline 50

0 Money supply and Riksbank balance sheets, two chapters

 Money supply back to 1620.  Riksbank balance sheets back to 1668.  Enable us to write the whole monetary history of the Riksbank The Riksbank, the world’s oldest central bank The Riksbank balance sheet

 Goals of the Riksbank: 1) Price stability, 2) lending 3) Security of the financial system 4) Business cycle stabilization 5) Seigniorage  Financial markets

Both influence  Assets: 1) Reserves 2) Loans 3) Securities  Liabilities 1) Deposits 2) Notes 3) Equity

Monetary systems

 Before 1624, silver standard  1624-1776, copper and silver standard. First notes 1660s. The Riksbank 1668 – product of copper standard. De facto paper standard 1745- 1776.  1776-1873. Silver standard. De facto paper standard 1789-1803, and 1809-1834. Growth of private banks, use of private notes  1873-1914. Classical gold standard. 1904 – Riksbank monopoly of note issue.  1914-1971. Suspended gold standard, gold exchange standard, Bretton Woods.  1971- Fiat standard. Copper plate, weighing 20 kg, 1644 Notes, coins and coin tokens in mn daler kopparmynt 1660-1780 Stockholm banco account books damaged in fire. M3, M0, coins and GDP in current values (mn SEK) Future continuation or off-shots of the project?

 Update database on Riksbank’s homepage  Property prices, back to the 1400s, more towns, different types of properties  Bank statistics  National wealth  National income, wage and capital shares  Revise GDP, SNA2008, back to Middle Ages  Interest rates, bonds, private banks  Money supply, monthly  CPI, monthly  International cooperations