Research Discussion Papers, Bank of Finland
No 5/1994:
Viewpoints on "Three Assessments of Finland's Economic Crisis and Economic Policy"
Jarmo Kontulainen ()
and Jouko Vilmunen ()
Abstract: This paper summarizes the basic arguments given by
professors Christian Bordes, David Currie and Hans Söderström in their
reports on the state and behaviour of the Finnish economy prior to mid
1993. The focus is primarily on the analytical frameworks or models used by
the professors to organize their thoughts on the Finnish economy, and,
admittedly, at some risk of oversimplification interpretes the reports
through common analytical principles. The paper argues that basically each
of the reports subscribes to the idea of a credit cycle as the driving
force behind the development of the Finnish economy during the last ten
years or so. Thus the very nature of the credit cycle is analyzed in the
paper and interpreted in a way suitable for economic policy analysis. This
discussion is followed by the policy analysis, which is organized through a
sequence of policy issues and proposals raised by the professors in their
reports. The paper tries to emphasize and evaluate those aspects of the
analysis pursued by the professors which relate to the (lack of)
credibility of the then prevailing policy regime and the feasibility of the
various policy measures taken. Finally, the paper draws attention to some
of the ideas discussed by the professors related to future policy options
in Finland.
Keywords: economic crisis; credit cycle; monetary policy; deregulation of capital markets; (follow links to similar papers)
22 pages, March 15, 1994
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