be compared to a walking man, who has to stand firm on both legs. should one of the legs fail to respond in a timely and coordinated way for whatever reason, many adverse consequences would inevitably follow. although fiscal policy is of course extremely useful in many respects, i am quite skeptical as regards this specific feature that is so important for the elaboration of an appropriate policy mix, namely the stabilisation properties of an active fiscal policy geared towards macroeconomic fine - tuning. this “ leg ” seems quite unreliable to me, for several reasons. first of all, experience shows that fiscal impulses are frequently implemented too late, after the occurrence of the shock. these delays simply reflect a time - consuming decision - making process. let me draw your attention on the various steps involved : the identification of the problem, the elaboration of the required measures, the discussion of these measures and their political adoption, their implementation and the time it takes before they exert an impact on aggregate demand. there are many examples of allegedly contra - cyclical policies that turn out to exert a procyclical impact on the economy because of the time lags involved. in these circumstances, fiscal impulses could contribute to magnify economic cycles. in addition, long and variable delays increase the uncertainty about the impact of discretionary measures on the economy. this “ impact uncertainty ” will increase the uncertainty for economic agents and monetary policy - makers. furthermore, any stabilisation policy has to be conducted in a symmetrical way in order to avoid a systematic drift in the level of public expenditure. this condition is unfortunately difficult to fulfill, because many expenditure items are not flexible downwards. they could be increased in an easy way when the policy mix requires an expansionary fiscal policy, but a decline of the same magnitude will in all probability not be implemented when a restrictive stance becomes more appropriate. let me give the example of luxembourg to illustrate the validity of this point. the compensation of employees and social transfers - two expenditure categories characterised by a weak downward flexibility for evident reasons - jointly account for about 70 % of total general government expenditure. on a priori grounds, only the intermediate consumption of general government could be used in a symmetric way and in a timely manner, but this expenditure item does not account for more than 3 % of gdp. in addition, it is split between the central government and local governments, which would also require a close co - ordination between these two entities. the weak magnitude of fiscal multipliers

has cost the people of sweden thousands of kronor more per year. the real effects have a high social and economic price one of the more tangible effects of the crisis of the 1990s was its impact on the labour market. having gotten used to a level of unemployment of a few per cent, we then saw unemployment increase to double figures over only a couple of years. overheating at the end of the 1980s and the resulting financial crisis almost doubled long - term unemployment. and, of course, shocks to the national economy of this kind do not spare us citizens in our role as taxpayers either. problems in the banking sector impact the country ’ s citizens in several ways a banking crisis thus impacts individual citizens in several ways. lower or even negative growth leads us, as employees, to run an increased risk of unemployment and to earn lower wages than would otherwise have been the case. when the growth path falls over the longer term, we also have to count on lower pensions. bank crises also risk being costly to us in our role as taxpayers. if the government is forced to compensate those who have put money into a bank, or even take over and capitalise a bank on the ropes, there will be less funding left for other purposes. taxes will be higher or public welfare lower – or both. as almost all citizens are also bank customers, they are also impacted more directly. a crisis in the swedish banking system would lead to higher funding costs for the banks and thus higher lending rates. customers in a bank needing to be restructured may also need to change bank and negotiate conditions under circumstances that would probably not be particularly favourable. all of this risks leading to major difficulties for households. and this is something that we saw all too many examples of at the start of the 1990s. financial crises ultimately threaten fundamentally important social functions an even more serious financial crisis could even threaten fundamentally more important social functions. households are dependent on the banks ’ ability to manage payments so that they can receive wages, purchase food and so on. in turn, our banks are dependent on the financial market as a whole. if a serious crisis should break out – if the payment systems should stop working, if the banks should stop trusting each other or if the banks should cancel payments – there would be problems for a great many of us. as a conjectural experiment, we could ask ourselves how many swedish households would be able to cope with a week or two in which neither charge cards nor atms functioned. thankfully, we haven