Working Papers,
Lund University, Department of Economics

Abstract: 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 Woods-system 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.

Keywords: Fiscal rules; fiscal policy council; fiscal policy; policy learning; Sweden

JEL-codes: E52; E62; E63; E65; F44; H62; O52

37 pages, June 30, 2014

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wp14_26.pdf  

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Fortchoming as

Lars Jonung, 'Reforming the Fiscal Framework. The Case of Sweden 1973-2013', "Reform Capacity and Macroeconomic Performance in the Nordic Countries", Oxford University Press

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