Working Paper Series
Industrial Subsidies in Sweden: Macro-Economic Effects and an International Comparison
Abstract: Between 1970 and 1978, industrial subsidies in Sweden rose
from 4.9 % to 16 % of value added in mining and manufacturing. Most of this
increase was due to increased wage subsidies to specific firms facing acute
difficulties. The Swedish industrial subsidy program seems to be both
larger in relation to industrial output and more selective than similar
programs in Great Britain, Italy, Norway, and West Germany. Simulations on
a firm-based macro model of the Swedish economy show that a selective wage
subsidy yields higher industrial output, employment and export in the short
run than alternative subsidy policies but also considerably worse economic
performance in the longer term.
Keywords: Subsidies; Manucatruing; Industry; Wage; (follow links to similar papers)
JEL-Codes: E24; H20; L60; (follow links to similar papers)
38 pages, November 1982
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