Today Matthew Yglesias is hyping Sweden's recent rosy economic data in a post titled "Unorthodox Monetary Policy Worked Nicely In Sweden; Will Anyone Notice?"
He's referring to the fact that in 2009 there was a wave of articles claiming that Sweden's central bank, the Riksbank, would be charging a negative interest rate on reserves held as cash at the central bank in an attempt to get banks to lend more.
As I noted yesterday, this idea is hogwash - banks don't lend their reserves to the public and interest on reserves doesn't have any direct effect on banks lending behavior. Indeed, the New York Times corrected the record on Carter Dougherty's economics blog just a few weeks after the initial erroneous reports in an article called "Negative Interest Rates in Sweden?"
The truth is, Sweden never charged banks a negative interest rate on overnight deposits; that's the significant interest rate on bank reserves. They actually paid a positive interest rate on reserves, just as most central banks now do.
Sweden's monetary policy was aggressive for sure! Proponents of more aggressive central bank policy would do well to learn about what the Riksbank actually did, and how it worked. There's a document called The Lower Limit of the Riksbank's Repo Rateavailable online that allows anyone to do just that.
But no one is helped when we try to do analysis based on hype instead of facts. Press reports often get technical details wrong; it pays to follow up with people who know what they are talking about.