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The boom-bust cycle in Finland and Sweden 1984-1995 in an international perspective

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  • Lars Jonung
  • Ludger Schuknecht
  • Mika Tujula

Abstract

This paper compares the boom-bust cycle in Finland and Sweden 1984-1995 with the average boom-bust pattern in industrialized countries as calculated from an international sample for the period 1970-2002. Two clear conclusions emerge. First, the Finnish-Swedish experience is much more volatile than the average boom-bust pattern. This holds for virtually every time series examined. Second, the bust and the recovery in the two Nordic countries differ markedly more from the international pattern than the boom phase does. The bust is considerably deeper and the recovery comes earlier and is more rapid.

Suggested Citation

  • Lars Jonung & Ludger Schuknecht & Mika Tujula, 2005. "The boom-bust cycle in Finland and Sweden 1984-1995 in an international perspective," European Economy - Economic Papers 2008 - 2015 237, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:ecopap:0237
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    References listed on IDEAS

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    1. Felix Eschenbach & Ludger Schuknecht, 2004. "Budgetary risks from real estate and stock markets [‘Kapitalvinster, hushållens konsumtion och sparande’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 19(39), pages 314-346.
    2. Detken, Carsten & Smets, Frank, 2004. "Asset price booms and monetary policy," Working Paper Series 364, European Central Bank.
    3. Michael D. Bordo & Olivier Jeanne, 2002. "Boom-Busts in Asset Prices, Economic Instability, and Monetary Policy," NBER Working Papers 8966, National Bureau of Economic Research, Inc.
    4. David G. Mayes & Liisa Halme & Aarno Liuksila, 2001. "Improving Banking Supervision," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-28819-5, December.
    5. Albert Jaeger & Ludger Schuknecht, 2007. "Boom-Bust Phases in Asset Prices and Fiscal Policy Behavior," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 43(6), pages 45-66, November.
    6. Lars Jonung & Jaakko Kiander & Pentti Vartia, 2008. "The great financial crisis in Finland and Sweden - The dynamics of boom, bust and recovery, 1985-2000," European Economy - Economic Papers 2008 - 2015 350, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    7. Lars Jonung & Hans Tson Söderström & Joakim Stymne, 1996. "Depression in the north - boom and bust in Sweden and Finland, 1985-93," Finnish Economic Papers, Finnish Economic Association, vol. 9(1), pages 55-71, Spring.
    8. Harding, Don & Pagan, Adrian, 2002. "Dissecting the cycle: a methodological investigation," Journal of Monetary Economics, Elsevier, vol. 49(2), pages 365-381, March.
    9. Lars Jonung & Thomas Hagberg, 2005. "How costly was the crisis of the 1990s? A comparative analysis of the deepest crises in Finland and Sweden over the last 130 years," European Economy - Economic Papers 2008 - 2015 224, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    10. Mr. Burkhard Drees & Ceyla Pazarbasioglu, 1998. "The Nordic Banking Crisis: Pitfalls in Financial Liberalization: Pitfalls in Financial Liberalization," IMF Occasional Papers 1998/007, International Monetary Fund.
    11. Philip Lowe & Claudio Borio, 2002. "Asset prices, financial and monetary stability: exploring the nexus," BIS Working Papers 114, Bank for International Settlements.
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    Cited by:

    1. Brixiova, Zuzana & Vartia, Laura & Wörgötter, Andreas, 2010. "Capital flows and the boom-bust cycle: The case of Estonia," Economic Systems, Elsevier, vol. 34(1), pages 55-72, March.
    2. Zuzana Brixiova & Laura Vartia & Andreas Woergoetter, 2009. "Capital Inflows, Household Debt And The Boom Bust Cycle In Estonia," William Davidson Institute Working Papers Series wp965, William Davidson Institute at the University of Michigan.
    3. Lars Jonung & Jaakko Kiander & Pentti Vartia, 2008. "The great financial crisis in Finland and Sweden - The dynamics of boom, bust and recovery, 1985-2000," European Economy - Economic Papers 2008 - 2015 350, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    4. Claudio Borio & Bent Vale & Goetz von Peter, 2010. "Resolving the financial crisis: are we heeding the lessons from the Nordics?," Working Paper 2010/17, Norges Bank.
    5. Jannsen, Nils, 2008. "Weltweite konjunkturelle Auswirkungen von Immobilienkrisen," Kiel Discussion Papers 458, Kiel Institute for the World Economy (IfW Kiel).

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    More about this item

    Keywords

    asset price cycles; real interest rates; financial crisis; Finland; Sweden; Jonung; Schuknecht; Tujula;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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