Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 11: Off Gold and Back again. Finnish and Swedish Monetary Policies 1914-25

Tarmo Haavisto and Lars Jonung ()
Additional contact information
Tarmo Haavisto: Department of Economics, Postal: Lund University, Box 7082, SE-220 07 LUND, SWEDEN
Lars Jonung: Dept. of Economics, Stockholm School of Economics, Postal: P.O. Box 6501, SE-113 83 STOCKHOLM, SWEDEN

Abstract: This paper compares monetary and economic developments in Sweden and Finland during the period 1914-1939. Both countries experienced high monetary growth and high rates of inflation as a result of wartime events. At the return of peace, they were faced with a choice of either deflation or devaluation. Sweden chose deflation and Finland devaluation. This choice had a major impact on the path of the two economies in the 1920s and 1930s. Basically, Finland managed to avoid the depression that affected Sweden due to deflation in 1920-1923.

Keywords: Gold standard; monetary economics; inflation; central banking; exchange rate determination

JEL-codes: E52; E58; N24

38 pages, March 1994

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