Lars Jonung
Professor emeritus
Reforming the Fiscal Framework. The Case of Sweden 1973-2013
Författare
Summary, in English
This paper explores the evolution of Swedish fiscal policy from one extreme approach to another one in less than four decades. After the demise of the Bretton Woodssystem in the early 1970s, Swedish fiscal policy was based on a Keynesian approach with the goal to stabilize the business cycle and maintain full employment using a large set of instruments in a discretionary manner. In the wake of the deep financial crisis in the early 1990s, this policy paradigm was eventually replaced by a rule-bound scheme. A fiscal framework was set-up as an instrument to rein in public finances. The present goal of fiscal policy is to maintain sustainable public finances while avoiding discretionary measures.
The fundamental changes in the past 40 years in the fiscal policy regime – the goals, the instruments and the institutional framework for fiscal policy-making – is studied as the outcome of a learning process where the economic crises hitting the Swedish economy forced
policy-makers and economists to rethink and redesign the use of fiscal policy. The process of policy learning is a continuous one. New changes in the fiscal regime will follow in the future.
By now, Swedish public finances are among the strongest in Europe. Sweden may serve as a model as it has carried out a successful fiscal consolidation since the mid-1990s while simultaneously developing a comprehensive fiscal framework and displaying an impressive macroeconomic record. A set of policy lessons are distilled.
The fundamental changes in the past 40 years in the fiscal policy regime – the goals, the instruments and the institutional framework for fiscal policy-making – is studied as the outcome of a learning process where the economic crises hitting the Swedish economy forced
policy-makers and economists to rethink and redesign the use of fiscal policy. The process of policy learning is a continuous one. New changes in the fiscal regime will follow in the future.
By now, Swedish public finances are among the strongest in Europe. Sweden may serve as a model as it has carried out a successful fiscal consolidation since the mid-1990s while simultaneously developing a comprehensive fiscal framework and displaying an impressive macroeconomic record. A set of policy lessons are distilled.
Avdelning/ar
- Nationalekonomiska institutionen
Publiceringsår
2014
Språk
Engelska
Publikation/Tidskrift/Serie
Working Paper / Department of Economics, School of Economics and Management, Lund University
Volym
26
Länkar
Dokumenttyp
Working paper
Förlag
Department of Economics, Lund University
Ämne
- Economics
Nyckelord
- fiscal policy
- fiscal policy council
- Fiscal rules
- policy learning
- Sweden
Status
Published