Some Fiscal and Monetary Policy Experiments in Sweden and Discussions

Both monetary and fiscal instruments have been continuously and rather systematically used in Swedish stabilization policy during the entire postwar period. The policy has relied mainly on rather conventional "Keynesian" tools of fiscal and monetary policy: variations in public spending and taxation, interest rate variations, and attempts to influence the supply of credit and money. It may be of some interest to report on the experiences of these tools, in the context of general macro theory. However, there are also a number of experiments with "new" tools worth studyingspecial tax-subsidy program (such as investment taxes and so-called investment funds policy) to influence private investment; attempts to make variations in public investment programs more useful in countercyclical policy by way of an actual "shelf of public projects"; active labor mobiIity policy; "protected works" for people with special difficulties to compete in the open labor market; experiments with various kinds of credit market regulations, etc. There are also a number of interesting problems to report on possible destabilizing effects on income formation of the highly progressive tax system, as well as on the effects of fiscal policy actions on the behavior of organizations. Let us start with a schematic picture of the general performance of fiscal stabilization policy in Sweden after the Second World War.