MONETARY POLICY AND INFLATION IN SWEDEN: AN ECONOMETRIC ANALYSIS OF FISCAL AND EXCHANGE RATE EFFECTS
Abstract
This study analyzes the impact of monetary policy on inflation in Sweden over five decades, focusing on the interplay between government expenditure, exchange rate movements, GDP growth, fiscal balance, and unemployment. Using an Ordinary Least Squares (OLS) regression framework with time-series macroeconomic data, the paper quantifies the extent to which policy instruments influence price stability. Diagnostic tests confirm model robustness, with results showing that higher government consumption and fiscal discipline reduce inflation, while GDP growth and currency depreciation increase it. Findings support the Phillips Curve in the Swedish context, emphasize the role of exchange rate stability, and highlight the importance of coordinated monetary and fiscal policy for sustainable economic growth. Policy recommendations call for balanced fiscal discipline, exchange rate monitoring, and labor market reforms to control inflation without sacrificing employment.
References
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These references provide the theoretical foundation for the study, linking monetary policy tools to inflation dynamics in Sweden. Let me know if you need citations in a specific format (APA, MLA, Chicago) or if additional sources should be included.
