The world famous Swedish Model has been transformed substantially since 1980s into more market-conformist socioeconomic system. This study tries to explain the transformation as the result of internal tensions among policies and institutions constituting the Model. And it argues that the subsequent macroeconomic policy regimes introduced to solve the problems of the Model--especially 'the Third Way Economic Policy'(TWEP) in 1980s--also entailed important policy discords and thereby failed to solve the economic problems. Especially TWEP's failure to establish new stable norms is explained by its policy discords and the non-correspondence between its policy components and the institutional and political environments surrounding them. The anlytical framework of this study encompasses the following concepts. 1) policy discords, policy-environmental discords: 'Theory of varieties of Capitalism' emphasizes the institutional complementarities as a vital condition for good performance of an economic system. But among institutions and policies constituting a system there can be not only complementarities but also discords. And policy mix and/or policy-institution mix are constructed or arranged in line with 'priority among policy goals'. And policies well fit to or well embedded in main institutional environments usually make good performances. 2) norm based policy vs. norm breaking policy: 'Norm based policy' is a policy which respects and follows the existing norms. 'Norm breaking policy' is the opposite one. 'Norm based policy' can be categorized into 'market norm based policy' and 'norm based policy by non-market coordination'. The main policies constituting the Swedish Model were second type ones. Norms constructed and maintained by non-market coordination need some prerequisites to be sustainable: mutual trust among game players; power balance of game players; balanced pay-offs among game players; limited influence of outsiders. TWEP in 1980 was introduced to solve the economic turbulances in 1970s substantally due to policy discords and/or policy-institutional discords in the Swedish Model. TWEP entailed the following policy components: offensive devaluation in 1982; tax reform in 1990/1991 with the orientation of broader tax base and lower marginal tax rates; radical deregulation of financial market all through 1980s; anti-inflation policy. The performance of TWEP was very good till late 1980s. But since then high infaltion and bubble economy deteriorated the policy and led the financial crisis in early 1990s. There are some reasons why TWEP failed to achieve low inflation rate. 1) Failure to keep wage moderation: The collapse of the centralized collective bargaining system in 1980s did not provide a good institutional environment for wage moderation. And the pwer resouces of white collar unions--they were outsiders of the wage moderation game--had been strengthened by the deindustrialization of the Swedish economy. Thus, TWEP was not well fit to the changed institutional environment of industrial realtions. 2) Policy discords and bad timing of policy mix: Deregulations of the financial market after the devaluation aggravated the inflationary pressure. The underfinanced tax reform in 1990/91 also contributed to that. TWEP was not successful in building policy mix especailly in timing of policy arrangements. The whole history of TWEP can be interpreted as failed efforts to form a internal norms in line with the newly set external norms, i.e., to keep the fixed exchange rate. The macroeconomic policy regime after the financial crisis in early 1990s is basically monetarist one with external anchors, i.e, participating in EU, introducing floating exchange rate system. Thus, TWEP was a tansitional and hybrid economic policy regime between traditional Keynesian one and monetarist one.