Sweden invented countercyclical budget balancing over the full economic cycle

Evidence

In 1933, the government resolved to ensure that business got on board by giving them a commitment to balance budgets over the whole cycle rather than over a given financial year. By 1936, this commitment spawned an economic commission that advocated the creation of a budget-balancing fund that would use accumulated surpluses to reduce government deficits. Countercyclical fiscal policy had arrived. Meanwhile taxation was structured in such a way that it stimulated investment. These reforms were in turn coupled to a policy of centralizing labor market institutions and promoting the increasing concentration of business to ensure trust and cooperation over wages among labor market partners. — Mark Blyth, Austerity, 522

Categorization

• DEFINE: Concretely defines countercyclical fiscal policy as budget balancing over the whole cycle plus a surplus-funded deficit-reduction reserve.
• SHARE: The 1933 Swedish deal — cyclically balanced budgets as the price of business buy-in — is a perfect anecdote for an economics-minded friend who identifies countercyclical policy with Keynesian demand management alone.
• XREF: connects to: Swedish austerity in the 1920s produced the greatest slump in the nation’s history — Mark Blyth, Austerity: The History of a Dangerous…, 520