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OECD Economic Surveys: Sweden 2007

image of OECD Economic Surveys: Sweden 2007

In this 2007 edition of OECD's periodic survey of Sweden's economy, OECD finds strong macroeconomic performance and  impressive productivity growth coupled with persistently low inflation.  The expansion is set to continue.   Among the challenges addressed are making employment inclusive for both immigrants and natives, and better allocation in the housing market.

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Why has inflation been persistently low?

Average inflation in Sweden has been one of the lowest among European countries since the mid-1990s. Three supply-side factors help to explain this phenomenon, all related in some sense to increased global integration. First, a shift towards imports from low-cost producing countries has resulted in falling import prices. Second, deregulation and increased product market competition with foreign companies entering the market has led to price falls in some sectors, notably in retailing. Third, wage growth has lagged productivity and kept unit labour costs down. This chapter reviews these factors and analyzes the policy options for the central bank.

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