Hedda Thorell

Research

Quantitative Easing and Portfolio Rebalancing: Evidence from a Small Open Economy
Draft available upon request

Who sells to the central bank during QE, and where does the liquidity go? I study this question leveraging purchase-allocation surprises implied by the Riksbank’s implementation of QE in 2020–2021 combined with proprietary holdings data for the universe of Swedish bonds from 2019 to 2024. I construct an investor-level exposure to QE shocks and use this exposure measure to trace portfolio rebalancing. I find that unexpected purchases lower yields. Turning to rebalancing, I find that more exposed investors sell significantly more covered bonds. The response is highly heterogeneous: foreign investors are the most elastic and account for about half of total sales. Yet I find little evidence that foreigners rebalance into other Swedish bonds, implying limited domestic spillovers. There is also no evidence of exchange-rate depreciation; instead, foreign selling is mirrored by a similar decline in repo positions collateralized by covered bonds, suggestion a decrease in repo financing rather than capital outflows.

The Macroeconomic Consequences of Undermining Central Bank Independence:  Evidence from Governor Transitions
Joint with with Marijn A. Bolhuis (IMF) and Rui Mano (IMF)
IMF Working Paper No.  2026/040
Covered in World Economic Outlook, October 2025. WEO BOX 2.3.

Monetary Policy and Car Consumption
Work in progress