Comments on article on DN's debate page

The article by the LO (Swedish Trade Union Confederation) economists published as a debate article in today's Dagens Nyheter is based on entirely incorrect assumptions. The article claims that the Riksbank expressed in its statement on the submission "Stabilisation policy in the monetary union" (SOU 2002:16) a desire to conduct fiscal policy if Sweden joins the Eurosystem. The Riksbank has no desire or possibility to conduct fiscal policy in the event of Sweden entering the Eurosystem. Nor would this be compatible with its role as central bank within the Eurosystem.

The basis for the Riksbank's statement on this submission was the same as that of the committee; if Sweden joins the Eurosystem, there is a risk that developments in prices and wages may deviate from the desirable levels, particularly in small countries. This could in the long run have negative effects on growth and employment. There is therefore good reason to discuss a potential fiscal policy framework. Such a framework should provide stability for wage formation, a point that leading trade union representatives have also emphasised.

In its response to the submission the Riksbank attempted to profit from the experiences gained from ten years of inflation targeting. The Riksbank emphasised the value of having a clear goal for its policy. One possibility would be to have a national inflation target for fiscal policy. In addition, it is necessary to have the appropriate means to achieve such a target. The Riksbank has also been meticulous in its formation of the monetary policy process. Keywords here are clarity, consistency of actions and transparency. It should be easy for anyone who so wishes, whether members of parliament, media, financial market participants, etc., to understand how monetary policy has been built up in order to be able to follow and assess it. It was suggested in the Riksbank's statement that it would be useful to examine whether the same type of framework could be constructed for fiscal policy. In this context it would be possible to benefit from the experiences of the regulatory framework built up for the budgetary policy, with a surplus target and expenditure ceiling, that has applied since the mid-1990s.

The fiscal policy processes tend to be slower than the monetary policy processes and may therefore need to be speeded up. It is in this light that the proposals in the statement on the submission should be seen with regard to examining the possibility of delegating the right to determine tax rates to the government or another authority.