DOES FINANCIAL DEREGULATION CAUSE A CONSUMPTION BOOM

According to a growing number of critics, the process of financial lib eralisation in the 1980s is to blame for the volatile macroeconomic de velopment in a number of countries, including the U.K. and the Nordic economies. We examine how financial deregulation affected one importan t component of aggregate demand, private consumption. A main finding i s that the Swedish consumption boom of the late 1980s can be explained along other lines than financial deregulation. The mid-1980s also con stituted a period when real wage growth picked up, and our data are co nsistent with the simple idea that permanent income dynamics was an im portant factor.