Chapter 4: The Swedish Model

This chapter tries to explain the strong performance of public finances in Sweden and looks at what lessons for other countries can be drawn. Section 4.2 reviews the development of public finances over time. Section 4.3 begins by surveying the research on why fiscal policy in modern democracies may be subject to a deficit bias and then discusses how the fiscal framework established in Sweden may have helped to contain such tendencies. The importance of output growth to fiscal consolidation is highlighted in Section 4.4. Section 4.5 sums up the conclusions.