the shopping mall Kärnan. This square naturally become a central part of the city. Östersund continued to grow after the Second World War. Lugnvik was incorporated into the city in 1954 and Östersund was, like the rest of Jämtland, affected by the Rehn-Meidner-model, though not in the same way. The Swedish Keynesian policy was launched in order to improve the mobility of the labour force. Jämtland was struck hard by this when the people moved from the countryside to cities, from inland to coast and from the north to the south. As an urban area Östersund was affected by the Million Programme and urban districts like Körfältet were created. The negative view towards industry changed when the Social Democrats came to power for the first time in the city's history in 1952. Industries were enticed to Östersund through the national localization policy and industrial areas were created in Odenskog and Lugnvik. Development was not, as already mentioned, as good in the rest of Jämtland as it was in Östersund and as a counter to the governmental policy, the Republic of Jamtland was established in 1963. Östersund became the capital of the tongue-in-cheek republic and the home of the freedom festival Storsjöyran. Östersund continued to grow and in 1970 Frösö köping was made part of Östersund. In 1971 a major reform occurred in Sweden creating large municipalities replacing all the older institutions; the new large municipality was named after the city. As in the rest of Sweden, the public sector greatly expanded at this time. In 1960 the public sector of Sweden constituted about 30 per cent of Sweden's total gross domestic product; by the mid-1980s the number had grown to 65 per cent. At the time jobs were growing in the county council, the government and in the new municipality. The main reasons for the large expansion were the expanded transfer payment to the households that occurred along with growing interest and public consumption. Everything was financed by heavy tax increases. The entirety of the 1970s was a period of expansion. Besides the new industrial complex the Frösö bridge was constructed, a new police station, Z-kupolen (burned to the ground in 1989), Storsjöteatern, Folkets hus, neighborhood churches, malls, etc. The county administrative office and the hospital were expanded and large residential areas grew up in the aforementioned Körfältet and Lugnvik areas, as well as in Odensala. As early as the