1 Comments on Comments on Anders Forslund: Anders Forslund: Den svenska Den svenska jämviktsarbetslösheten jämviktsarbetslösheten – – en översikt en översikt Bertil Holmlund Bertil Holmlund Department of Economics Department of Economics Uppsala University Uppsala University
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Comments on Comments on
Anders Forslund:Anders Forslund: Den svenska Den svenska
jämviktsarbetslösheten jämviktsarbetslösheten – – en översikten översikt
Bertil HolmlundBertil HolmlundDepartment of EconomicsDepartment of Economics
Uppsala UniversityUppsala University
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OutlineOutline
TheoryTheory The Swedish developmentThe Swedish development Recent Swedish reformsRecent Swedish reforms
Unemployment insuranceUnemployment insurance The income tax systemThe income tax system Other tax reforms Other tax reforms
Can fiscal policy affect the Can fiscal policy affect the equilibrium unemployment rate equilibrium unemployment rate
(NAIRU)?(NAIRU)? Yes, in an open economyYes, in an open economy NAIRU depends in general on the real NAIRU depends in general on the real
exchange rateexchange rate Fiscal policy can influence the real Fiscal policy can influence the real
exchange rateexchange rate A fiscal expansion can reduce NAIRU A fiscal expansion can reduce NAIRU
through a real appreciationthrough a real appreciation
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Equilibrium unemployment Equilibrium unemployment in an open economyin an open economy
Employment
Real exch. rate
WS/PS
AD
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A fiscal expansion in A fiscal expansion in an open economyan open economy
Employment
Real exch. rate
WS/PS
AD
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Does the real exchange Does the real exchange rate matter for rate matter for unemploymentunemployment??
Direct evidence: Lindblad and Sellin Direct evidence: Lindblad and Sellin (2003)(2003)
Indirect evidence: taxes and Indirect evidence: taxes and unemploymentunemployment The real exchange rate is part of the total The real exchange rate is part of the total
wedge between real consumer and wedge between real consumer and producer wagesproducer wages
A real appreciation is analogous to a tax A real appreciation is analogous to a tax cutcut
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Long run considerationsLong run considerations
Balanced trade?Balanced trade? Relevant for the very long runRelevant for the very long run
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The Swedish The Swedish developmentdevelopment
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1111
Why did NAIRU double Why did NAIRU double between 1990 and 1994?between 1990 and 1994?
(Rehnbergavtalet)(Rehnbergavtalet) Hard to identify major changes in Hard to identify major changes in
institutions that can explain a sharp rise in institutions that can explain a sharp rise in NAIRU in the early 1990sNAIRU in the early 1990s
But NAIRU probably increased from the But NAIRU probably increased from the 1960s up to the early 1990s1960s up to the early 1990s
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Did NAIRU fall over the Did NAIRU fall over the 1990s?1990s?
Benefit cuts took placeBenefit cuts took place Imperfect wage-indexation of benefitsImperfect wage-indexation of benefits Temporary work agencies (1993)Temporary work agencies (1993) Product market competition increasedProduct market competition increased Coordinated bargaining (Industriavtalet Coordinated bargaining (Industriavtalet
1997)1997)
So NAIRU probably fell over the 1990sSo NAIRU probably fell over the 1990s
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Recent reformsRecent reforms
Less generous unemployment Less generous unemployment insuranceinsurance