Anyone who knows the political economy of Sweden, especially in this period, would note a rather large omission from this paper's version of events—the triple meltdown of real estate markets, stock markets, and the exchange rate that happened to Sweden between 1989 and 1993. Sweden had just popped a bubble in its real estate and stock markets that developed after deregulatory moves by the government in 1987 massively expanded the supply of private credit, but you would never know that from this paper. As Peter Englund tells it, in 1989 alone "the construction and real estate stock price index fell by 25 percent … [and] by the end of 1990 the real estate index had fallen 52 percent." On top of this massive deflation, which had huge knock-on effects in the labor market, Sweden was hit by the deflationary effects of a currency crisis in the ERM mechanism that combined with the real estate bust to reduce GDP growth by −5.1 percent between 1991 and 1993. Then, and only then, did interest rates really skyrocket. No one cared one jot about the national debt at this point.

Mark Blyth, Austerity, loc. 573