The Unassuming Economist

From a paper by Jonatan Svanlund:

“In this chapter, we will study how the shift from a fixed exchange rate regime to a floating exchange rate regime and an independent Riksbank working toward an explicit inflation target took place in Sweden in the early and mid-1990s. Until the beginning of the 1990s, the overriding view among economists and politicians but also in the business community and partly in the trade unions was that a fixed exchange rate was the norm around which economic policy should be based. But in November 1992 it was impossible to maintain the exchange rate and the fixed exchange rate was abandoned, and the shift from the deeply rooted idea of a fixed exchange rate to the new system took place during a very short period. A central theme of the chapter will be the importance of ideas and their role in changing economic regulations and institutional conditions. The central role the Riksbank itself played in reformulating its policy will, therefore, be under scrutiny. The chapter concludes by discussing how the current regime can be seen in relation to general economic developments from 1993 to 2023.”