Change search
ReferencesLink to record
Permanent link

Direct link
A role model for the conduct of fiscal policy?:  Experiences from Sweden
Stockholm University, Faculty of Social Sciences, Department of Economics.
2013 (English)In: Journal of International Money and Finance, ISSN 0261-5606, Vol. 34, 177-197 p.Article in journal (Refereed) Published
Abstract [en]

Sweden was hit by a severe macroeconomic crisis in the early 1990s. GDP fell for three consecutive years in 1991-1993, unemployment increased by 9 percentage points, banks had to be nationalized, and public budget deficits exceeded 10 percent of GDP. The recovery was however quick. GDP growth was around four percent in 1994-1995, and budget deficits had been eliminated by 1998. Growth remained high in the subsequent decade, and the government debt ratio was reduced by almost 50 percent of GDP. This paper describes and analyzes the Swedish crisis and the policy measures implemented in response to the crisis. Policy measures include abandoning the fixed exchange rate, fiscal austerity, a new stricter fiscal framework, and several structural reforms in the 1990s. These policies were appropriate for handling the Swedish crisis, but the Swedish experiences have limited applicability for the current debt crisis, in particular because currency depreciation in combination with strong growth on export markets was a key ingredient in the Swedish recovery. Implementing fiscal austerity would have been more complicated absent this export-led growth. Moreover, the new fiscal framework has most likely contributed to strengthening public finances, but I demonstrate that budget surpluses and high GDP growth only explain around a third of the reduction in the public debt ratio after 1997.

Place, publisher, year, edition, pages
2013. Vol. 34, 177-197 p.
Keyword [en]
Macroeconomic crisis, Banking crisis, Fiscal consolidation, Structural reforms, Fiscal rules
National Category
Business Administration Economics
URN: urn:nbn:se:su:diva-89570DOI: 10.1016/j.jimonfin.2012.11.010ISI: 000316644400011OAI: diva2:618633


Available from: 2013-04-29 Created: 2013-04-29 Last updated: 2013-04-29Bibliographically approved

Open Access in DiVA

No full text

Other links

Publisher's full text

Search in DiVA

By author/editor
Flodén, Martin
By organisation
Department of Economics
In the same journal
Journal of International Money and Finance
Business AdministrationEconomics

Search outside of DiVA

GoogleGoogle Scholar
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

Altmetric score

Total: 40 hits
ReferencesLink to record
Permanent link

Direct link