Swedish Economists Argue for Green Fiscal Policy to Stop Recession

On 24 August in the Dagens Nyheter newspaper, two Swedbank economists, Anna Breman and Andreas Wallstrom, said in an op-ed  that Sweden and the European Union should ease regulation and allow for a more expansive and greener fiscal policy to counter the threat of a global recession.

Bloomberg reported that the two economists argue that the Swedish government has enough fiscal leeway to support greener investments without increasing the general tax level, starting with the 2020 budget. The bank estimates that the government could run yearly budget deficits of 50-70 billion kronor ($5-7 billion) without increasing the country’s public debt-to-GDP ratio.

The two economists also suggested that the government should take advantage of negative rates to carry out climate-smart investments in infra-structure and technology. As well as allow exemptions to the EU’s strict fiscal rules for countries that borrow to fund green investments.

In addition, they recommended expanding and speeding up plans by the Swedish Debt Office to issue green bonds and encouraged the Riksbank to consider buying green corporate and government bonds.