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A Marcoeconomic Analysis of Sweden
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Ryan Buckley
Economics, University of New Hampshire, Durham, NH 03824
Sweden Housing Crash of 1990-1993
Introduction
Unemployment Rate
Throughout past and recent years, the state of
Sweden’s economy has been as good and stable
as many of the top countries in the European
Union with only a couple minor hiccups along
the way. Sweden has been a country that has
strived during tough economic times in the
world, including the Great Recession of 2008
and the 2012 Euro Crisis, but has struggled at
other points in its history.
Foreign Exchange Market
During the early 1990s, Sweden experienced a
housing market crash similar to the United States
housing market crash in 2008. Figure 1 shows what
happened to aggregate supply and demand during
this time. Both curves shifted left causing
decreased aggregate output and inflation rate
leaving the economy in a recession. Unemployment
rate, as shown in figure 2, also increased
dramatically rising almost 9% in three years.
Figure 2
Sweden During the Great Recession of 2008
The foreign exchange market is a large part of
Sweden’s economy. Net exports are its biggest
contributor to national income coming in at 44.5%
of all GDP. Named sixth easiest country to trade
with, Sweden is known globally for its products,
especially its products in technology. Machines,
vehicles, and electronics make up for 43% of
Sweden’s
exports
while
pharmaceuticals,
chemicals, wood products, and minerals come in as
runner-ups.
Sweden’s Exports
Figures 1&2 Explanation
Interest Rate
Figure 4
Figures 2&3 Explanation
The Great Recession of 2008 surprisingly did not
seem to have much of a negative effect on Sweden
like it did on most other European countries. A large
financial surplus gave the economy a slight buffer
when the crisis hit. As shown in figure 3, aggregate
demand shifted leftwards decreasing both the
inflation rate and aggregate output. To combat this,
the central bank of Sweden, Sveriges Riksbank,
imposed monetary policy tightening, increasing
interest rates in order to restore aggregate demand to
long-run aggregate supply equilibrium.
References
sTAMD
Low Public
Debt, Simulations
High Household Debt
"Current Inflation Rate." Riksbank.se. 15 Mar. 2016. Web. 11 Apr. 2016. <http://
The public debt of Sweden is
considerably low coming in at only
40% of the country’s GDP. On the other
side, household debt is very high
where the debt is 140% of household
income. This could be very risky
because as supply of credit expands, it
makes lenders more likely to lend with
a decline in risk possibly leading to a
recession in the near future.
Figure 5
Percent of Household
Debt to Income
Figure 6
www.riksbank.se/en/Monetary-policy/I nflation/Curren t-inflati on-rate />.
Dougherty, Carter. "Stopping a Financial Crisis, the Swedish Way." The New York Times. 22
Sept. 2008. Web. 12 Apr. 2016.
<http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?_r=0>.
Loman, Herwin. "Country Report Sweden." Rabobank. 8 Apr. 2014. Web. 11 Apr. 2016.
<https://economics.rabobank.com/publications/2014/april/country-report-sweden/>.
McWhinney, James E. "The Nordic Model: Pros and Cons | Investopedia." Investopedia. 07
Oct. 2014. Web. 11 Apr. 2016.
<http://www.investopedia.com/articles/investing/100714/nordic-model-pros-andcons.asp?utm_term=sweden&utm_content=semunp&utm_medium=organic&utm_source=&utm_campaign=&ad=&an=&am=&o=40186&a
skid=&l=dir&qsrc=999&qo=investopediaSiteSearch#>.
Sutherland, Scott. "How Sweden Created a Model Economy." Sweden.se. 12 Nov. 2013.
Web. 11 Apr. 2016. <https://sweden.se/business/how-sweden-created-a-modeleconomy/>.
"Sweden Interest Rate | 1994-2016 | Data | Chart | Calendar | Forecast." Trading
Economics. Web. 11 Apr. 2016. <http://www.tradingeconomics.com/sweden/interestrate>.
"The Swedish Experience." Riksbank.se. 30 Sept. 2011. Web. 11 Apr. 2016.
<http://www.riksbank.s/sv/Press-och-publicerat/Tal/1997/The-Swedish-Experience/>.
"Why Sweden Has Had a Good Crisis." The Local. 02 Mar. 2012. Web. 11 Apr.
2016.<http://www.thelocal.se/20120302/39446>.