If confidence in public finances begins to loosen, many who would normally be willing to lend to the government, that is, buy government securities, will be reluctant to do so due to concerns about not getting their money back. When fewer people are willing to lend and those who do demand a higher return for the risk they take, interest rates rise. In turn, this means that government expenditure increases, the situation worsens and there is a risk of entering a negative spiral with increasing expenditure and rising deficits and interest rates. In a worst case scenario, fiscal tightening may be required in an already poor economic situation in order to restore confidence. To succeed with this is, of course, very difficult, as the austerity measures mean that the economy will shrink further in the short term. This, in turn, reduces the tax base and simultaneously increases the need for support for vulnerable groups. Given that there is confidence in the sustainability of public finances, there is also room to use fiscal policy to counter recessions and address structural problems in the economy. To a large extent, fiscal policy stabilisation of economic activity takes place via so-called automatic stabilisers, without any political decisions having to be made.3 However, if there is confidence in public finances, it is also possible to make decisions about expenditure increases or tax cuts, so-called discretionary fiscal policy, without this giving rise to doubts about the sustainability of the finances.
And while the deficits are running, the policy is continuously evaluated with regard to how it relates to the target path and how effective it appears to be.22 Although a time contingent strategy may be somewhat less attractive to economists than a state contingent one, it could have some advantages: it would probably be easier to implement and manage politically, as it has a predefined clear sunset clause. As long-term sustainable public finances are, of course, still a basic precondition, once the period is over, or once the set goal has been achieved, a switch is made to keeping the debt stable in relation to GDP again. Of course, even if a time contingent rather than state contingent strategy is chosen, the risk exists that politicians will start to consider, over time, that the floodgates have been opened or that it will be too difficult to end the expansionary policy. However, if the rules are set out in advance in a formal and clear framework, these risks should be manageable. After all, in Sweden, we have shown for many years now that we are quite good at continuously evaluating and debating our economic policy and sticking to frameworks that we have set up to fulfil long-term economic objectives.23  21 Such a policy would have some similarities with automatic stabilisers. These are also state contingent in the  sense that they start to work when something special occurs, for example when unemployment starts to rise.