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This paper describes, analyzes and compares two cases of major policy and institutional reform in economic policy: Australia's 1983 decision to float its currency and Sweden's 1990 decision to align itself economically and politically by applying for EU membership. Both involved the overturning of long-standing policy commitments and deeply held beliefs on the part of the social-democratic governments that took these steps. We argue that notwithstanding the major institutional differences between the two countries, both changes are explained by the exercise of change-oriented leadership along the lines set out in five propositions that have been derived from the literatures on policy change and comparative government. [ABSTRACT FROM AUTHOR]