We have a demographic development towards an increasingly ageing population and a rising dependency ratio. This means that we can have a situation with many old age pensions who push up public expenditure at the same time as fewer individuals of working age contribute to tax revenue, which deteriorates public finances. Increased immigration can in this context be positive for the age composition, as those born abroad have a favourable age structure. Just over 70 per cent of those born abroad are of working age, which can be compared with around 55 per cent of those born in Sweden. A continued inflow of people born  15 [24]  abroad could therefore keep down the dependency ratio going forward, see Figure 11. 19 Figure 11. Total dependency ratio and dependency ratio for Swedish born 1.1  1.1 Dependency ratio, total Dependency ratio, only Swedish born 1  1  0.9  0.9  0.8  0.8  0.7  0.7  0.6 1980  1990  2000  2010  2020  2030  2040  0.6  Note. The dependency ratio refers to the number of children and elderly people in relation to the working age population. Children refers to people in the age range 0-19 and elderly people to those aged 65 or older. Sources: Statistics Sweden and the Riksbank  A rapid population growth generally promotes economic growth. A large population gives increased scope for economies of scale and thereby better capacity to introduce new technology that can make production more efficient.
The activation of the macroprudential tools in order to create a buffer to be used in bad times incorporates a new dimension into the interactions with monetary policy. That is an issue which, in my view, should be analysed further. At a minimum, in these cases, monetary policy and macroprudential policy should take into account their respective decisions when calibrating the use of their instruments. As for fiscal policy, it is also important to emphasise that the creation of shockabsorption capacity through macroprudential decisions should not be used as an argument for relaxing fiscal policy. In other words, fiscal policy should also 7/11  create buffers in good times to be used in bad times, through automatic stabilisers or discretionary action, in particular in countries belonging to a monetary union. Another key issue related to this discussion is that the capital buffer built up in good times is expected to be released when the phase of the cycle changes. Significantly, this decision can be even more complex than those made in the activation phase. In this respect, and given the empirical evidence we have, there is a clear issue of timing. If it is released too early, it may even accentuate the expansion of the financial cycle. If it is released too late, it may entail a significant cost to the real economy. It is also necessary to assess whether the release has to be once-and-for-all or gradual. The release of the buffers may induce negative market reactions or generate conflicts with the microprudential supervisor.