Who sells to the central bank during quantitative easing (QE), and what the sellers do with the proceeds, matters for how QE is transmitted to the macroeconomy. Studying the Riksbank's QE programme in 2020--2021, I estimate how sellers respond to QE policy by combining security-level holdings data for the universe of Swedish bonds with quasi-experimental variation using short-run deviations from the Riksbank's pre-announced allocation rule. Domestic investors rebalance about 90 percent of the proceeds into close substitutes with a similar risk profile. Foreign investors, who absorb most of the purchases, instead reduce their holdings of Swedish krona bonds, lowering their share of the market from 27 to 18 percent. Central banks often emphasize that QE in a small open economy works partly by depreciating the currency, which could occur if foreign sellers moved the proceeds abroad. However, I find that foreign sales coincide with a reduction in their krona repo borrowing, with no evidence that they weakened the exchange rate. The results suggest that domestic sellers support the portfolio balance channel of QE, while foreign sellers funded in Swedish krona neither rebalance within the Swedish bond market nor put pressure on the exchange rate.

This paper studies the macroeconomic consequences of undermining central bank independence through politically motivated transitions of central bank governors. Leveraging a new panel dataset covering 132 central bank governor transitions in 28 advanced and emerging market economies since 2000, we document the timing, frequency, and political drivers of these leadership changes. Tenures of governors with politically motivated appointments are associated with higher and more volatile inflation, realized and expected. Professional forecasters also tend to expect such governors to be more dovish when responding to shifts in inflation. Using local projections in a difference-in-difference setting, we find that following the announcement of a politically motivated governor transition nominal and real short rates decline and expected and realized inflation rise. At the same time, GDP growth increases in the aftermath of such transitions, consistent with an expansionary short-run macroeconomic impulse. These effects are more pronounced when the incoming governor professes unorthodox views on monetary policy, suggesting that political interference in central bank leadership induces a temporary growth–inflation trade-off. Long-term inflation expectations only rise in the case of unorthodox governors with politically motivated appointments, suggesting costs to central bank credibility are much more pronounced in those cases.

The cyclical nature of durable goods in general, and cars in particular, make them a natural focus for economic policies attempting to stabilize household expenditure and ultimately aggregate demand. Using the universe of car transactions in Sweden during 1999–2019, matched to administrative data with information on the buyers and sellers, this paper documents new facts about the effects of monetary policy on car expenditure. Following a monetary expansion, we find that the aggregate rise in car expenditures is driven mostly by the extensive margin. The rise in the extensive margin lasts for three years and is followed by three years of below-trend car purchases, which reduces the cumulative response by 49 percent relative to its peak. Further, the top income-quintile accounts for 74 percent of the car-spending response, driven by purchases of new cars.