The O2 gives the ecu the signal to run air/fuel mix for most optimum engine performance/economy based on driving conditions. Without it everything suffers. On later cars the O2 is in the cat so if you remove the cat you would need to install a older manifold for the O2. You can buy a Bosch O2 for a 86 Mustang 5.0L at any of the bb stores, Advance, Autozone, etc for around $30-35. You will need to splice the wires and seal them well. For a savings of $100 or so, not too bad. Search the forum and you'll get more info on this swap. Good luck.

Removing the O2 sensor from the fuel system will cause some problems.
The most obvious problem will be very poor fuel economy.
The computer will put the car in to "limp" mode and it will run
very rich - resulting in poor fuel economy, exhaust problems, etc.

Your check engine light will come on and stay on if you unplug
the O2 sensor. I don't know about closing the circuit - I think
this would be challenging because the computer is looking
for a low voltage signal input from the O2 sensor.

I am also in an area where the emissions tests are not an issue,
but for your Volvo to run it's best I believe you will have to
put a good O2 sensor in there.

Good luck with it.

--
1990 240DL - 185K, 1994 850 Wagon - 140K, 1989 Ranger 235K