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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 Group Munich.
  • Handle: RePEc:ces:ceswps:_3725
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp3725.pdf
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    References listed on IDEAS

    as
    1. Lars Calmfors & Simon Wren‐Lewis, 2011. "What should fiscal councils do?," Economic Policy, CEPR;CES;MSH, vol. 26(68), pages 649-695, October.
    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. 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.
    4. 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.
    5. Lars Calmfors, 2011. "The Role of Independent Fiscal Policy Institutions," CESifo Working Paper Series 3367, CESifo Group Munich.
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    Cited by:

    1. 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.

    More about this item

    Keywords

    fiscal councils; fiscal discipline; fiscal frameworks;

    JEL classification:

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

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