By Lars Jonung, Jaakko Kiander, Pentti Vartia
Following global warfare II, Nordic nations have been mostly considered as profitable and strong economies. This notion was once, besides the fact that, shattered within the early Nineteen Nineties while Finland and Sweden encountered critical monetary crises. right here, the authors discover the indicators of monetary predicament - lowering actual source of revenue, hovering unemployment and exploding public deficits - and their devastating results. The ebook compares and contrasts the stories of Finland and Sweden, then adopts a world viewpoint, encompassing the studies of Asia, Latin the US, Denmark and Norway. classes from the Nineties quandary are drawn, and attainable strategies prescribed. the realization is that long term results of economic crises - monetary liberalization and integration - aren't as dramatic because the momentary results, yet might turn out to be of larger significance through the years. in simple terms the longer term will express no matter if those long term advantages will stability or perhaps outweigh the large momentary expenditures of the crises. hugely appropriate to the present foreign monetary predicament presently afflicting the area economic climate, this well timed publication will turn out worthwhile to economists and different social scientists with a normal curiosity in monetary crises, and to these with a extra particular curiosity within the evolution and versions of Scandinavian economies.
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Following international struggle II, Nordic nations have been normally considered as winning and reliable economies. This conception was once, even though, shattered within the early Nineties whilst Finland and Sweden encountered serious monetary crises. the following, the authors discover the indications of monetary problem - reducing genuine source of revenue, hovering unemployment and exploding public deficits - and their devastating results.
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Extra resources for The Great Financial Crisis in Finland and Sweden: The Nordic Experience of Financial Liberalization
2 The co-variation between economic developments in Finland and Sweden was high, although the depression was deeper in Finland than in Sweden. 4 Measured by the output loss, the depression of the 1990s was the most severe peacetime crisis during the 20th century in Finland, more severe than the Great Depression of the 1930s. 2 1987 1989 1991 1993 1995 1997 1999 Inflation in Finland and Sweden, 1985–2000 (per cent) rose to a higher level than during the 1930s. In Sweden, the crisis of the 1990s was the second worst during international peacetime.
Unemployment mirrored the depression, shooting up in both countries in the early 1990s. The rate of unemployment rose from a level of around 3 per cent in Finland during 1989–91 to around 18 per cent at the beginning of 1994. 2 The co-variation between economic developments in Finland and Sweden was high, although the depression was deeper in Finland than in Sweden. 4 Measured by the output loss, the depression of the 1990s was the most severe peacetime crisis during the 20th century in Finland, more severe than the Great Depression of the 1930s.
6). The real economy, especially the construction sector, grew strongly in the latter half of the 1980s. The Finnish economy was characterized by a rapid growth in GDP and a boom in the labour market. Widespread optimism and strong economic growth led to a shortage of labour and accelerating wage inflation due to wage drift. In 1989 the unemployment rate was 3 per cent and long-term unemployment was almost non-existent. At the same time, nominal wages rose by 10 per cent that year. 7). The increase in share prices was seen as the result of the new financial integration between Finland and the rest of the world, which increased the price of previously undervalued Finnish shares.