Lars Jonung: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
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.
37 pages, June 30, 2014
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