An All Too Successful Reform?

Abstract

Abstract In 1997 Sweden implemented a top-down budget reform, according to which voting over the budget starts with a vote on a nominally defined expenditure ceiling, and where proposals for public spending increases in an area must be balanced by expenditure cuts within the same area. After the reform, sovereign debt in Sweden fell substantially. This chapter describes why budget reforms are considered difficult to implement and discusses why Sweden nevertheless succeeded in doing so. Four factors are identified: forward looking political parties, bridge builders between academia and politics, a well-functioning system of commissions, and social learning from past experiences of economic problems. Assessed using the PPPE-framework, the reform comes close to being a complete success, but a discussion has emerged according to which it may have been too successful and kept public spending undesirably low.