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The Swedish Fiscal Policy Council: Watchdog with a Broad Remit

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  • Lars Calmfors

Abstract

The Swedish Fiscal Policy Council (FPC) set up in 2007 is one example of the recent international trend to create independent fiscal watchdogs. The FPC has established itself as an important participant in the Swedish economic policy discussion. The FPC has small resources and a broad remit including employment, growth, income distribution and monitoring of how well the government explains its policies in addition to evaluation of fiscal policy. The reason why it can work is that the FPC acts as a complement to other institutions. The interaction between fiscal policy and other policy areas as well as the possibility to exploit the council’s expertise in several areas are arguments in favour of the broad mandate, but at the same time there could be a risk that interest is diverted away from fiscal issues. The FPC’s experiences illustrate the time inconsistency issues involved in establishing a fiscal council: a government has an incentive to create such a body as a signal that it will pursue responsible and rational policies, but it also has an incentive to constrain the council’s activities once government policies are criticised.

Suggested Citation

  • Lars Calmfors, 2012. "The Swedish Fiscal Policy Council: Watchdog with a Broad Remit," CESifo Working Paper Series 3725, CESifo.
    • Handle: RePEc:ces:ceswps:_3725
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp3725.pdf
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    References listed on IDEAS

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    1. Lars Calmfors & Simon Wren-Lewis, 2011. "What should fiscal councils do? [Fiscal policy when monetary policy is tied to the mast]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 26(68), pages 649-695.
    2. Xavier Debrun & David Hauner & Manmohan S. Kumar, 2009. "Independent Fiscal Agencies," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 44-81, February.
    3. Mr. Anthony M Annett & Mr. Jörg Decressin & Mr. Michael Deppler, 2005. "Reforming the Stability and Growth Pact," IMF Policy Discussion Papers 2005/002, International Monetary Fund.
    4. Robert P. Hagemann, 2010. "Improving Fiscal Performance Through Fiscal Councils," OECD Economics Department Working Papers 829, OECD Publishing.
    5. Alt, James E. & Lassen, David Dreyer, 2006. "Fiscal transparency, political parties, and debt in OECD countries," European Economic Review, Elsevier, vol. 50(6), pages 1403-1439, August.
    6. Calmfors, Lars, 2010. "The Role of Independent Fiscal Policy Institutions," Seminar Papers 767, Stockholm University, Institute for International Economic Studies.
    7. Lars Calmfors, 2011. "The Role of Independent Fiscal Policy Institutions," CESifo Working Paper Series 3367, CESifo.
    8. Lars Calmfors, 2003. "Fiscal Policy to Stabilise the Domestic Economy in the EMU: What Can We Learn from Monetary Policy?," CESifo Economic Studies, CESifo, vol. 49(3), pages 319-353.
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    Cited by:

    1. Beetsma, Roel & Debrun, Xavier & Sloof, Randolph, 2022. "The political economy of fiscal transparency and independent fiscal councils," European Economic Review, Elsevier, vol. 145(C).
    2. Mrs. Nina Budina & Ms. Andrea Schaechter & Miss Anke Weber & Mr. Tidiane Kinda, 2012. "Fiscal Rules in Response to the Crisis: Toward the "Next-Generation" Rules: A New Dataset," IMF Working Papers 2012/187, International Monetary Fund.
    3. Flodén, Martin, 2013. "A role model for the conduct of fiscal policy? Experiences from Sweden," Journal of International Money and Finance, Elsevier, vol. 34(C), pages 177-197.

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    More about this item

    Keywords

    fiscal councils; fiscal discipline; fiscal frameworks;
    All these keywords.

    JEL classification:

    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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