Treasury Guest Lecture: Fiscal Policy for the Future Series - Professor Lars Calmfors

About this presentation Join this seminar to gain insights on how Sweden’s comprehensive fiscal framework and policy measures have successfully reduced government debt while addressing new economic stabilisation challenges – valuable lessons for enhancing New Zealand’s own fiscal policies and economic resilience. Professor Calmfors is a key advisor to the Swedish Government on macroeconomic policy – having been the first Chair of Councils advising the Government on Fiscal Policy, Economic Policy, European Monetary Union and Labour Market Policy. After a deep economic crisis in Sweden in the 1990s, a fiscal framework with a clearly defined fiscal balance target, expenditure ceilings and a top-down budget procedure was adopted. Later, a Fiscal Policy Council, with a remit to monitor fiscal policy, was established and an anchor for gross government debt was added. In addition, Sweden is encompassed by EU fiscal rules. The framework has contributed to a gradual reduction of government debt. Fiscal policy has mostly been countercyclical. Current discussions concern the level of the fiscal balance target in a situation with large needs for government investment (not least in defence capabilities), the division of responsibility for stabilising the economy over the cycle between fiscal and monetary policy, and the role of the Fiscal Policy Council (ex-ante recommendations in addition to ex-post evaluation). The strength of automatic stabilisers, the use of semi-automatic stabilisers and the pros and cons of discretionary fiscal policy in the stabilisation of the business cycle are important issues that need to be addressed. About the presenter Lars Calmfors is Professor Emeritus at the Institute for International Economics Studies, Stockholm University and Senior Research Fellow at the Research Institute of Industrial Economics, Stockholm. His main research concerns labour economics and macroeconomic policy. He has been a member of the Committee for the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. He chaired the Economic Council in the Swedish Ministry for Finance, the Swedish Government Commission on the EMU, the European Economic Advisory Group at CESifo, the Swedish Fiscal Policy Council and the Swedish Labour Policy Council. He is currently a member of the economic council of the Minister for Finance and of the labour market policy council of the Minister for Employment. He has done expert work for Treasuries in the UK, Finland and Norway, and for the OECD, the European Parliament and the Nordic Council of Ministers. About this seminar series New ideas, innovative concepts, research evidence and expert advice are all crucial to stimulate and inform the Treasury’s economic analysis and advice. Our current theme for guest lectures - Fiscal Policy for the Future - explores the role of stabilising, sustainable and effective fiscal policy. Speakers provide insights into how fiscal policy can be designed to support government to meet its current and future objectives and obligations while adapting to changing circumstances and delivering value to the New Zealand public. Fiscal policy has a stabilising role in helping to smooth the business cycle, while sustainability in fiscal policy is foundational for resilience to both shocks and longstanding challenges, such as climate change, technological advancements and demographic trends. Ensuring effective and value for money expenditure is important so that fiscal policy contributes to the living standards of New Zealanders, both now and in the future. Please note that the views, opinions, findings, and conclusions expressed in the Treasury Guest Lecture Series are those of the individual presenters. They do not necessarily reflect the views of the New Zealand Treasury or the New Zealand Government. For updates and our latest research visit https://www.treasury.govt.nz/