Impact of different variables on the economic growth of Sweden Dissertation

Impact of different variables on the economic growth of Sweden - Dissertation Example This paper has conducted a comprehensive research on finding out the effects of tax policies, employment and wages on the level of economic growth of Sweden. Using empirical data, it has been found that economic growth of Sweden does not depend on tax policy, employment status and wages. I. INTRODUCTION Sweden is a very economically significant country in the world. Although it is a very small country, it experiences significant economic growth. A very interesting thing to note about Swedish economy is the dispute over the character of the economic system of Sweden. Its economic system can not be characterized as a complete socialism or pure capitalism. In Sweden private sector dominates in all production areas. In fact, around ninety percent of total production in this country is produced in private sector. Looking at the dominance of private sector, it seems that there prevails full corporatism in Sweden. But the interesting thing is that majority of production in private sector, a round fifty percent, is exposed to state controls. Looking at this nature of Swedish economy, it is some times characterized as a system of welfare state socialism. Some, however, like to view this system as welfare state corporatism. ... Government undertakes various policies relating to tax, employment and wages. Tax accounts for a major place in fiscal policies. While in one hand, tax is an important source of revenue to the government, on the other hand it also reduces consumer purchasing power by reducing disposable income. Hence, changes in tax policy will definitely have effect on consumer purchasing behavior, and therefore, on aggregate demand of the economy and consequently on GDP of the country. Employment and economic growth has a strong association as well. In fact, there is a cyclical relationship between employment and economic growth where both are dependent on one another. While the level of employment of a country is dependent to a large extent on the level of economic growth, economic growth is also affected by various employment policies. Economic growth of a country is also related to wage level. While some think that a path of low wage can lead to economic growth, some others feel that a high wage economy is more efficient in achieving higher growth. Hence the level of growth of an economy is also dependent on wage policies taken by the government. In Sweden government has a significant role to play in controlling various economic operations. Hence, economic growth of Sweden can well be expected to be dependent on various economic policies undertaken by the government of the country. Hence, it can be assumed that governmental policies in the areas of taxes, employment and wages, produce some impact on economic growth. Aim and objectives It would be, therefore, quite interesting, to find out how tax policies, employment and wages affect economic growth of Sweden. Since the economy of Sweden can not be characterized as a nation which is fully controlled