Reforming the Fiscal Framework
Reforming the Fiscal Framework
The Case of Sweden 1973–2013
This chapter analyses fiscal policies from a learning perspective. The macroeconomic record of Sweden since the 1970s is characterized, focusing on how the design of stabilization policies has changed over time, in particular after the financial crisis in the early 1990s. It is argued that the crisis had a profound effect on the conduct of fiscal policy as well as the institutional framework for macroeconomic policy. As a response to the crisis, Sweden introduced new political and administrative institutions designed not only to attain long-run sustainable public finances but also to provide guidelines on the use of stabilization and structural policies. One important element of the fiscal framework is the establishment in 2007 of a fiscal policy council. The chapter discusses the remits of the council and gives a brief evaluation of its reports. The Swedish experience offers an important illustration of the importance of learning from past mistakes.
Keywords: fiscal policy, policy learning, crisis response, fiscal framework, fiscal policy council, Sweden
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