Policy papers 2006–

This IFN series includes business-related and policy-relevant papers. The series was launched in 2006 to provide a forum for the analysis of important policy issues. Its purpose is to explore the implications of the best and most current economic research for the design and conduct of policy.

Only Policy Papers in English are listed on this page. The complete list of Policy Papers can be found on our Swedish page.


75. Labour Markets in Finland and Sweden:
A Swedish Perspective

Per Skedinger

Labour market institutions in Finland and Sweden have many features in common. The many similarities have inspired a joint Finnish-Swedish research project on the effects of these institutions. Finland has experienced a prolonged economic downturn and Sweden’s system of wage bargaining has been suggested as a model for Finland. Aggregate wage formation has worked well in Sweden, but relative wage formation markedly less so and the effects of local bargaining are not clear.     

Link to the article in Finnish

73. The Turnaround of the Swedish Economy: Lessons from Business Sector Reforms

Fredrik Heyman, Pehr-Johan Norbäck and Lars Persson

How can a country overcome a long period of stagnant productivity growth in its business sector and reach its growth potential? Sweden during the 1970–2010 period can serve as an example to help other countries understand how to efficiently reform a business sector. In the 1990s, Sweden implemented a reform package that ignited a successful reorganization of a business sector that had faltered for decades.

To understand the economic forces behind this process, we first survey the industrial restructuring literature and then examine the reform package using Swedish matched plant-firm-worker data. The removal of barriers to growth for new and productive firms and increased rewards for investment in human capital were crucial to the success of Sweden’s reforms. Turning to cross-country evidence, we find that an increase in the World Bank’s Doing Business indicator is associated with an increase in GDP per capita. These findings suggest that policymakers have much to learn from country case studies and from analyses based on the World Bank’s Doing Business indices.

Our study of the Swedish experience can be a valuable case study for developing countries that are attempting to promote growth by developing their business sectors and for countries that are facing economic problems in the aftermath of the financial crisis.


63. Institutions, Policies and Growth in Europe: Quality versus Stability

Niclas Berggren, Andreas Bergh and Christian Bjørnskov

What triggers growth? How can the EU Member States ensure conditions that have a proven positive effect on growth? These questions are relevant, not least considering the recent financial and economic crisis which represents the deepest downturn in world economy since Second World War. How important are institutions – that is to say, formal rules and capacity to enforce those rules – for the economic performance of a country?

Although today we have access to an extensive body of research on the quality of institutions, the authors of this report add new insights by studying the effect of the stability of institutions on economic growth.

62. Dynamic Labor Markets: Organizing Labor Markets to Boost Job Opportunities and Social Welfare

Magnus Henrekson

Economic growth largely comes about through a process of extensive churning and restructuring, most of which is a shift from less to more successful firms within narrowly defined industries. In order to increase aggregate employment by, say, two per cent in a year, it may be necessary to create 7 to 10 times as many jobs, and worker flows need to be substantially larger still. Capitalism can be seen as a process of creative destruction where novel ideas continuously challenge old structures, thereby giving rise to structural transformation when new successful innovations, products, firms and industries arise while obsolete ones decline and exit. Empirical studies point out high-growth firms to be the main drivers of this process.

Research shows that high-growth firms can grow more in line with their inherent potential if labor markets are less regulated. Labor market institutions favoring reallocation and dynamism include portability of tenure rights, fully actuarial and portable pension plans, a full decoupling of health insurance from the current employer, decentralized and individualized wage-setting arrangements and government income insurance systems that encourage activation, mobility and risk-taking.

41. Privatization: Is Dismantling Public Authority an International Trend?

Henrik Jordahl

Despite recent government bailouts of private industry, stimulus packages, and state-led restructuring of companies, economic and academic trends toward privatization continue, with public opinion generally supportive or neutral toward privatization. It is important to realize that privatization does not necessarily imply the dismantling of public authority. Privatization and nationalization can and do coincide, and it is likely that we will see more of both in the near future.

29. Trade and FDI: Substitutability vs. Complementarity Revisited

Pehr-Johan Norbäck and Dieter Urban

This study examines how Foreign Direct Investments (FDI) and international trade are related, examining the impact of a growing and increasingly integrated world economy on Swedish exports and the foreign affiliate production of Swedish multinational firms.

24. Limping on Three Legs: The Development of Timor-Leste

Mats Lundahl and Fredrik Sjöholm

Timor-Leste is plagued by poor economic development and widespread political turmoil. Any substantial improvement in living standards requires the emergence of a modern sector. People must be given the opportunity to move out of agriculture where marginal productivity levels are very low and into an expanding modern sector.

19. Competition in TV-Distribution – A Framework and Applications to Sweden

Mats Bergman and Johan Stennek

This report investigates how well competition in the TV-industry works, primarily focusing on distribution. For this purpose we suggest a framework of analysis and, at the same time, we apply this framework to the Swedish market.

18. Non-discrimination

Henrik Horn and Petros C. Mavroidis

Two non-discrimination principles underlie the World Trade Organization Agreement, as well as many regional trade agreements. The "Most Favored Nation" clause (MFN) essentially requires that equal treatment be afforded to all imported goods, irrespective of their origin, as long as they are "like". The other non-discrimination principle, the "National Treatment" obligation (NT), requests importing countries to treat imported goods no less favorably than domestically produced "like" products. This note presents some basic law and economics of these provisions.

17. Ageing, pension reforms and capital market development in the new EU member states and other transition countries

Johan Almenberg and Christiane Nickel

We present new data on asset allocations of mandatory pension funds in the new EU member states and in other transition countries. Our comparative national data presents a unique opportunity to compare pension reform progress across these countries from a capital market perspective. Our main finding is that in a number of new EU member states and other transition countries, under-diversification of assets threatens to undermine the impact of multi-pillar reform on fiscal sustainability.

12. Protection of Property Rights and Growth as Political Equilibria

Andrea Asoni

This paper presents a survey of the literature on property rights and economic growth. It discusses different theoretical mechanisms that relate property rights to economic development.

11. Competition Economics

Johan Stennek

Imagine that you are advising a client on a planned merger with one of their competitors. Informal communication with the competition authority reveals that they are worried that the merger will reduce competition and harm the consumers. There is a clear risk that the whole project will be stopped. How could you help your client? How would you go about predicting the effects of the merger? Will price go up, as the competition authority fears, or is it possible that the merger will lead to lower prices instead? How could anyone know the effects in advance, before the merger has taken place?

3. Has U.S. Antitrust Policy Protected Consumers from the Abuse of Market Dominance?

Robert W. Crandall

Among the United States’ most important exports are its market-oriented economic policies. The privatization and de-regulation of the transportation and communications sectors come quickly to the mind of this student of economic regulation. But why should the EU or other countries, for that matter, wish to emulate U.S. antitrust (competition) policy?

2. New Rules for Dominant Firms in Europe

Mattias Ganslandt

The Commission has initiated a discussion about the application of the European competition rules for dominant firms. It recently published a Staff Discussion Paper which outlines some basic principles and raises a number of important questions, in particular related to the assessment of “exclusionary practices”

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