The Quest for Economic Stability: A Study on Swedish Stabilization Policies 1873-2019

This paper explores the evolution of Swedish stabilization policies through six policy regimes between 1873 and 2019. We focus on discretionary policy decisions by estimating policy shocks using a SVAR model. Through these shocks, we explore how stabilization policies have evolved over time and how policymakers responded to key economic events such as financial crises and wars. Our results show three key results i) policies are often a source of destabilization rather than stabilization, ii) regimes are designed for a specific time and ends when economic circumstances change, and iii) fixed exchange rates worsen the economic effects of financial crises.