Monday, 20 June 2011

Trouble ahead for Sweden? It’s aiming for a balanced budget.

Looks like Sweden is aiming for a balanced budget (hat tip to Marc Robinson).

As I’ve pointed out more than once on this blog, any country which aims for inflation of around 2% will need to run a significant deficit just to prevent its monetary base and national debt declining relative to GDP at 2% a year. If it doesn’t have that deficit, private sector saving desires may not be met, which may mean paradox of thrift unemployment.



  1. It does have an export surplus if the stats are to be believed. So the external sector can easily fund the domestic private sector if they decide to run a balanced government budget.

    In fact balance may not be enough. They might need to run a surplus.

  2. Well, afaik that export surplus isn't that large at all. Or? And also, they are trying to run a surplus of 2%. That's the stated goal of their treasury. It's all the hype there right now.


Post a comment.