1. A Marcoeconomic Analysis of Sweden Ryan Buckley Economics, University of New Hampshire, Durham, NH 03824 Throughout past and recent years, the state of Sweden’s economy has been as good and stable as many of the top countries in the European Union with only a couple minor hiccups along the way. Sweden has been a country that has strived during tough economic times in the world, including the Great Recession of 2008 and the 2012 Euro Crisis, but has struggled at other points in its history. Foreign Exchange Market Sweden Housing Crash of 1990-1993 The Great Recession of 2008 surprisingly did not seem to have much of a negative effect on Sweden like it did on most other European countries. A large financial surplus gave the economy a slight buffer when the crisis hit. As shown in figure 3, aggregate demand shifted leftwards decreasing both the inflation rate and aggregate output. To combat this, the central bank of Sweden, Sveriges Riksbank, imposed monetary policy tightening, increasing interest rates in order to restore aggregate demand to long-run aggregate supply equilibrium. IntroductionFigures 1&2 Explanation Figures 2&3 Explanation References During the early 1990s, Sweden experienced a housing market crash similar to the United States housing market crash in 2008. Figure 1 shows what happened to aggregate supply and demand during this time. Both curves shifted left causing decreased aggregate output and inflation rate leaving the economy in a recession. Unemployment rate, as shown in figure 2, also increased dramatically rising almost 9% in three years. Sweden During the Great Recession of 2008 sTAMD Simulations Figure 2 Low Public Debt, High Household Debt "Current Inflation Rate." Riksbank.se. 15 Mar. 2016. Web. 11 Apr. 2016.. Dougherty, Carter. "Stopping a Financial Crisis, the Swedish Way." The New York Times. 22 Sept. 2008. Web. 12 Apr. 2016.. Loman, Herwin. "Country Report Sweden." Rabobank. 8 Apr. 2014. Web. 11 Apr. 2016.. McWhinney, James E. "The Nordic Model: Pros and Cons | Investopedia." Investopedia. 07 Oct. 2014. Web. 11 Apr. 2016.. Sutherland, Scott. "How Sweden Created a Model Economy." Sweden.se. 12 Nov. 2013. Web. 11 Apr. 2016.. "Sweden Interest Rate | 1994-2016 | Data | Chart | Calendar | Forecast." Trading Economics. Web. 11 Apr. 2016.. "The Swedish Experience." Riksbank.se. 30 Sept. 2011. Web. 11 Apr. 2016.. "Why Sweden Has Had a Good Crisis." The Local. 02 Mar. 2012. Web. 11 Apr. 2016.. Unemployment Rate Place your Project Logo Here Sweden’s Exports The foreign exchange market is a large part of Sweden’s economy. Net exports are its biggest contributor to national income coming in at 44.5% of all GDP. Named sixth easiest country to trade with, Sweden is known globally for its products, especially its products in technology. Machines, vehicles, and electronics make up for 43% of Sweden’s exports while pharmaceuticals, chemicals, wood products, and minerals come in as runner-ups. Figure 4 Interest Rate Percent of Household Debt to Income The public debt of Sweden is considerably low coming in at only 40% of the country’s GDP. On the other side, household debt is very high where the debt is 140% of household income. This could be very risky because as supply of credit expands, it makes lenders more likely to lend with a decline in risk possibly leading to a recession in the near future. Figure 5 Figure 6