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Macroeconomic Policy and the External Constraint: The Danish Experience


  • Søren Bo Nielsen

    (Institute of Economics, University of Copenhagen)

  • Jørgen Søndergaard

    (Danish Economic Council)


This paper considers the relation between the external balance and economic policy formation in the context of the Danish economy during the last three decades. The main lines of macroeconomic development, the structure of the economy and economic policy in this period are expounded, and the question of how Denmark arrived at its present foreign debt to GDP ratio of close to 40 persent is posed. Finally, the nature of the external constraint on the Danish economy is addressed. A tentative conclusion is that a significant part of Danish foreign debt could be a reflection of the structure of tax and expenditure policy and demographics; still, current account deficits may cause concern to the extent that they arise from e.g. tax distortions - or for intergenerational distributional reasons.

Suggested Citation

  • Søren Bo Nielsen & Jørgen Søndergaard, 1990. "Macroeconomic Policy and the External Constraint: The Danish Experience," Discussion Papers 90-15, University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:kuiedp:9015

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    More about this item


    domestic monetary theory; balance of payments and adjustment mechanisms; private international lending; Denmark;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements


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