Research interests

My main research interest concerns macroeconomics and its intersection with labor economics. I am particularly interested in the supply side of macroeconomics: price and wage formation and the level and dynamics of unemployment.  I am also interested in international macroeconomics.

Most of my research in the macro-labor field is concerned with labor contracts, nominal wage rigidity, and the persistence of unemployment. Several papers, which were published in the 1980’s and 1990’s, dealt with these issues. In a more recent paper, published in Labour Economics 2005, we develop an efficiency wage model where firms are concerned about turnover, and where unemployed workers have trouble competing with employed job-searchers for jobs. Current work in progress incorporates these ideas into a New Keynesian model. Quantitative simulations show that our model is very successful in explaining sluggish wage adjustment, persistent unemployment, and long-lasting real effects of monetary policy.

Another paper, published in the Scandinavian Journal of Economics 2008, models wage formation in open economies theoretically and applies the model to aggregate wages in the Nordic countries. 

Most of my research on macro-labor has employed some form of insider-outsider model with bargaining, but as time has passed I have come to see efficiency wages and bargaining as very similar theories. Bargaining and efficiency wage models can explain real and nominal wage rigidity and a key implication from those theories is that the labor market is characterized by excess supply. In recent times, the literature has come to be dominated by search-matching models, which focus on matching frictions and the search behavior of unemployed workers. In a recent paper we try to empirically discriminate between efficiency-wage/bargaining theory and search-matching theory using firm-level wage and employment data.  The result is strong support for the former types of theories, where employment is determined by labor demand.

Another strand in my research is price dynamics over the business cycle.  I explore the implications of long-term relations between sellers and buyers (customer markets), the effects of financial constraints, interactions between investment and price decisions, and price-quantity dynamics in international markets.  In paper published in Economica 2002, I use customer market theory and predetermined prices to model price-quantity dynamics of Swedish exports using aggregate time series data.  In a recent paper, published in Journal of Money, Credit, and Banking 2009, we develop a model of price setting, investment, and production dynamics, and test it using firm-level data. We find strong support for the customer market model with financial constraints. In future research, we plan to explore the labor market implications of this model.

Another interest concerns the role of exchange rates in macroeconomic adjustment to shocks.  This interest arose when I was a member of the Swedish commission on EMU in 1995-96. Since then I have participated in the debate about EMU membership now and then. In the end, there is a very close relation between how one thinks about the labor market and wage formation, and how one thinks about the role of monetary and exchange rate policy.

A recent government report, I take a broad look at wage formation in Sweden.

My plan for the future is to continue working along two lines. One is to develop microeconomic theories of wage and price adjustment and to test those theories using microeconomic data. The other is to incorporate such theories into macroeconomic models, to examine their implications using quantitative simulation, and eventually to estimate the models using macro data.

I did my undergraduate studies and my Ph D at Stockholm University. From 1985 to 1994 I was research fellow at the Institute for International Economic Studies in Stockholm. Since 1994 I have been professor of economics at Uppsala University. I was a member of the Swedish commission on EMU in 1995-1996 and editor of the Scandinavian Journal of Economics 2006-2009.

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Updated 2011-01-19 by webmaster@nek.uu.se