Depending on when the next downturn occurs and how deep it is, there is thus a risk that monetary policy will not suffice when it comes to counteracting it. As I see it, this has implications for how to look upon the division of roles in stabilisation policy. There has long been a tendency, both in Sweden and abroad, to claim almost by default, that when you have a floating exchange rate it is the job of monetary policy and not fiscal policy to stabilise economic activity. Perhaps it is  18 For economies with sustainable public finances, government bonds are credit-risk free. The interest rate on long maturity government bonds reflects the path of expected short-rates and compensation for other risks related to the horizon of the investment and the liquidity of the bond market. 9 [24]  time, in the light of our experiences following the crisis, to qualify this picture somewhat. In a way, of course, fiscal policy always contributes to stabilising economic activity. For instance, systems for taxes and expenditure are often designed so that they automatically adapt to economic developments. Examples are progressive income taxes and unemployment benefits. On the other hand, there has long been scepticism against using so-called discretionary fiscal policy – direct decisions on adjusting taxes and public expenditure – with the aim of stabilising economic activity. One problem is that discretionary fiscal policy measures are often implemented or have an effect too late because of various delays, and they therefore aggravate economic fluctuations rather than stabilise them.
The Treasury can take note of this proposal, but can also ignore it, publishing a response. If the Treasury takes the advice, then the Office for Budget Responsibility (equivalent to the Swedish Fiscal Policy Council) will assess whether the measure is compatible with a sustainable fiscal policy. The idea is thus that discretionary fiscal policy measures shall replace the monetary policy stimulation that is not brought about because of the lower bound. Some argue that this would be a more effective and economically more reliable  19 Soon after the turn of the millennium, a committee investigated how stabilisation policy should be conducted in the event of Sweden introducing the euro (Swedish Government Official Reports, 2002). The committee considered that under normal economic fluctuations it would be enough to allow the automatic stabilisers to work and that discretionary fiscal policy would only be used in the case of unusually large disruptions. The reason the committee reached this conclusion was because of this type of problem. 20 See Yates (2017). 10 [24]  mechanism than trying to achieve the same effect through, for instance, the purchase of financial assets. 21 It is an open question whether a similar solution might function in Sweden. One condition that one should bear in mind, as the British proposal emphasises, is that the use of discretionary fiscal policy always entails a balancing act. Sweden's currently strong public finances provide protection against shocks.