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The great financial crisis in Finland and Sweden - The dynamics of boom, bust and recovery, 1985-2000

Author

Listed:
  • Lars Jonung
  • Jaakko Kiander
  • Pentti Vartia

Abstract

This paper explores the anatomy of the boom, deep depression and recovery in the Finnish and Swedish economies in the period 1985-2000. These fifteen years are divided into three phases: (1) financial liberalization and the boom and the overheating of 1985-90, (2) the outbreak and spread of the crisis to all sectors of the economy in 1990-92, and (3) the recovery 1993-2000. Each period is analyzed separately.

Suggested Citation

  • 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.
  • Handle: RePEc:euf:ecopap:0350
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    File URL: http://ec.europa.eu/economy_finance/publications/pages/publication13551_en.pdf
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    References listed on IDEAS

    as
    1. Jaakko Kiander & Pentti Vartia, 1996. "The great depression of the 1990s in Finland," Finnish Economic Papers, Finnish Economic Association, vol. 9(1), pages 72-88, Spring.
    2. Burkhard Drees & Ceyla Pazarbasioglu, 1998. "The Nordic Banking Crisis; Pitfalls in Financial Liberalization: Pitfalls in Financial Liberalization," IMF Occasional Papers 161, International Monetary Fund.
    3. Aaron Tornell & Frank Westermann (ed.), 2005. "Boom-Bust Cycles and Financial Liberalization," MIT Press Books, The MIT Press, edition 1, volume 1, number 9780262201599, January.
    4. Seppo Honkapohja & Erkki A. Koskela & Willi Leibfritz & Roope Uusitalo, 2009. "Economic Prosperity Recaptured: The Finnish Path from Crisis to Rapid Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012693, March.
    5. Jonung, Lars & Fregert, Klas, 2008. "Inflation Targeting Is a Success, So Far: 100 Years of Evidence from Swedish Wage Contracts," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 2, pages 1-25.
    6. Seppo Honkapohja & Erkki Koskela, 1999. "The economic crisis of the 1990s in Finland," Economic Policy, CEPR;CES;MSH, vol. 14(29), pages 399-436, October.
    7. Edquist, Harald, 2005. "The Swedish ICT miracle -- myth or reality?," Information Economics and Policy, Elsevier, vol. 17(3), pages 275-301, July.
    8. 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.
    9. King, Mervyn, 1994. "Debt deflation: Theory and evidence," European Economic Review, Elsevier, vol. 38(3-4), pages 419-445, April.
    10. Jennergren, L. Peter, 2001. "The Swedish Finance Company Crisis -- Could It Have Been Anticipated?," SSE/EFI Working Paper Series in Business Administration 2001:6, Stockholm School of Economics, revised 22 Apr 2002.
    11. Jonung, Lars & Schuknecht, Ludger & Tujula, Mika, 2005. "The boom-bust cycle in Finland and Sweden 1984-1995 in an international perspective," CFS Working Paper Series 2006/13, Center for Financial Studies (CFS).
    12. Seppo Honkapohja & Erkki Koskela & Jouko Paunio, 1996. "The depression of the 1990s in Finland : an analytic view," Finnish Economic Papers, Finnish Economic Association, vol. 9(1), pages 37-54, Spring.
    13. 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.
    14. Maliranta, Mika, . "Micro Level Dynamics of Productivity Growth. An Empirical Analysis of the Great Leap in Finnish Manufacturing Productivity in 1975-2000," ETLA A, The Research Institute of the Finnish Economy, number 38.
    15. James S. Fackler & Randall E. Parker, 2005. "Was Debt Deflation Operative during the Great Depression?," Economic Inquiry, Western Economic Association International, vol. 43(1), pages 67-78, January.
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    Cited by:

    1. repec:kap:iaecre:v:17:y:2011:i:3:p:241-257 is not listed on IDEAS
    2. Nidhaleddine Ben Cheikh & Christophe Rault, 2016. "The Role of the Business Cycle in Exchange Rate Pass-Through: The Case of Finland," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 14(1), pages 15-27, June.
    3. Starke, Peter & Kaasch, Alexandra & van Hooren, Franca, 2011. "Explaining the variety of social policy responses to economic crisis: How parties and welfare state structures interact," TranState Working Papers 154, University of Bremen, Collaborative Research Center 597: Transformations of the State.
    4. Michael Böheim, 2011. "The Privatisation of Public Assets as an Economic Policy Instrument: Private versus Public Ownership of Companies – Theoretical Foundations," Austrian Economic Quarterly, WIFO, vol. 16(3), pages 185-195, October.
    5. Michael Böheim, 2010. "Competition Policy in the Wake of the Economic Crisis," Austrian Economic Quarterly, WIFO, vol. 15(4), pages 349-363, December.
    6. Michael D. Bordo & Christopher M. Meissner, 2016. "Fiscal and Financial Crises," NBER Working Papers 22059, National Bureau of Economic Research, Inc.
    7. Kuusi, Tero, 2015. "The Finnish Great Depression of the 1990s: Soviet Trade or Home-Made?," ETLA Working Papers 32, The Research Institute of the Finnish Economy.
    8. Virkola, Tuomo, 2014. "Exchange Rate Regime, Fiscal Foresight and the Effectiveness of Fiscal Policy in a Small Open Economy," ETLA Reports 20, The Research Institute of the Finnish Economy.
    9. Michael Böheim, 2012. "The Privatisation of Public Assets as an Economic Policy Instrument: Private versus Public Ownership of Companies – the Practical Implementation of Privatisation Projects and Economic Policy Conclusio," Austrian Economic Quarterly, WIFO, vol. 17(1), pages 55-68, May.
    10. Heyman, Fredrik & Norbäck, Pehr-Johan & Persson, Lars, 2015. "The Turnaround of Swedish Industry: Reforms, Firm Diversity and Job and Productivity Dynamics," Working Paper Series 1079, Research Institute of Industrial Economics.
    11. Jonung, Lars & Schuknecht, Ludger & Tujula, Mika, 2005. "The boom-bust cycle in Finland and Sweden 1984-1995 in an international perspective," CFS Working Paper Series 2006/13, Center for Financial Studies (CFS).
    12. Michael Diemer & Uwe Vollmer, 2015. "What makes banking crisis resolution difficult? Lessons from Japan and the Nordic Countries," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 5(2), pages 251-277, December.
    13. Angelos Antzoulatos, 2011. "Greece in 2010: A Tragedy Without(?) Catharsis," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 17(3), pages 241-257, August.
    14. Bergin, Adele & Conefrey, Thomas & FitzGerald, John & Kearney, Ide, 2009. "Recovery Scenarios for Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS007.

    More about this item

    Keywords

    Financial crisis; financial liberalization; boom; bust; depreciation; Finland; Sweden; Jonung; Kiander; Vartia; The great financial crisis in Finland and Sweden; The dynamics of boom; bust and recovery; 1985-2000;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • 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
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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