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Boosting Growth in Crisis: Evaluating the Role of Fiscal Stimulus in Sweden’s Pandemic Recovery

Sundqvist, Lovisa LU (2023) EOSK12 20231
Department of Economic History
Abstract (Swedish)
The Covid-19 crisis presents an opportunity to evaluate the effectiveness of fiscal policy by investigating how fiscal stimuli aided recovery from the pandemic in Sweden. As Covid-19 have led to increased concerns of unsustainable debt levels, questions of how government spending has affected the economic rebound and fiscal sustainability arises. To tackle these questions, I evaluate pre-existing literature on fiscal multipliers and perform a debt sustainability analysis. Based on Sweden’s prevailing macroeconomic conditions, its existing sovereign debt status, and its internationally unique response to the pandemic, the result finds that Sweden had the ideal conditions for implementing fiscal stimuli, allowing for a fiscal multiplier... (More)
The Covid-19 crisis presents an opportunity to evaluate the effectiveness of fiscal policy by investigating how fiscal stimuli aided recovery from the pandemic in Sweden. As Covid-19 have led to increased concerns of unsustainable debt levels, questions of how government spending has affected the economic rebound and fiscal sustainability arises. To tackle these questions, I evaluate pre-existing literature on fiscal multipliers and perform a debt sustainability analysis. Based on Sweden’s prevailing macroeconomic conditions, its existing sovereign debt status, and its internationally unique response to the pandemic, the result finds that Sweden had the ideal conditions for implementing fiscal stimuli, allowing for a fiscal multiplier above one. The debt dynamics formulae estimates that fiscal policy did not offset Swedish fiscal sustainability. Hence, fiscal stimuli played an important role in the economic recovery and should be considered again in the future if the central bank is constrained from stimulating the economy at large because of ZLB interest rates. (Less)
Please use this url to cite or link to this publication:
author
Sundqvist, Lovisa LU
supervisor
organization
course
EOSK12 20231
year
type
M2 - Bachelor Degree
subject
keywords
Covid-19, fiscal policy, fiscal multipliers, government debt sustainability, debt dynamics, Sweden
language
English
id
9131974
date added to LUP
2023-08-30 08:44:32
date last changed
2023-08-30 08:44:32
@misc{9131974,
  abstract     = {{The Covid-19 crisis presents an opportunity to evaluate the effectiveness of fiscal policy by investigating how fiscal stimuli aided recovery from the pandemic in Sweden. As Covid-19 have led to increased concerns of unsustainable debt levels, questions of how government spending has affected the economic rebound and fiscal sustainability arises. To tackle these questions, I evaluate pre-existing literature on fiscal multipliers and perform a debt sustainability analysis. Based on Sweden’s prevailing macroeconomic conditions, its existing sovereign debt status, and its internationally unique response to the pandemic, the result finds that Sweden had the ideal conditions for implementing fiscal stimuli, allowing for a fiscal multiplier above one. The debt dynamics formulae estimates that fiscal policy did not offset Swedish fiscal sustainability. Hence, fiscal stimuli played an important role in the economic recovery and should be considered again in the future if the central bank is constrained from stimulating the economy at large because of ZLB interest rates.}},
  author       = {{Sundqvist, Lovisa}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Boosting Growth in Crisis: Evaluating the Role of Fiscal Stimulus in Sweden’s Pandemic Recovery}},
  year         = {{2023}},
}